Volume 1 Issue 2 2005


Colin Rowat
Department of Economic University of Birmingham

Jaysari Dutta
Department of Economic University of Birmingham

Abstract We explore common problems when agents have access to capital markets. The commons has a high intrinsic rate of return but its fruits cannot be secured by individual agents. Resources transferred to the capital market earn lower retuns, but are secure. In a two period modeel, we assess the consequences of market access for the commons survival and welfare; we compare strategic and competitive equilibria. Market access generally speeds extinction, with negative welfare consequences. Against this, it allows intertemporal smoothing, a positive effect. In societies in which the former ctfect dominates, marker liberalization may be harmful. We reproduce the multiple equilibria found in other models of competitive agents, when agents are strategic, extinction dates are unique. Strategic agentsS generally carn their surplus by delaying the commons extinction, in unusual cases, strategic agents behave as competitive ones even when thcir numbers are small.
Keywords Strategic Equilibrium, Competitive Equilibrium, Rational Expectations Equilibrium, Markov Perfect Equilibrium, Autarky.
Year 2005
Volume 1
Issue 2
Type Research paper, manuscript, article
Recognized by Higher Education Commission of Pakistan, HEC
Category "Y"
Journal Name IBT Journal of Business Studies
Publisher Name ILMA University
Jel Classification -
ISSN no (E, Electronic) 2409-6520
ISSN no (P, Print) 2416-8393
Country Pakistan
City Karachi
Institution Type University
Journal Type Open Access
Manuscript Processing Blind Peer Reviewed
Format PDF
Paper Link