Article | Open Access | Published: 1 December 2005
The Commons with Capital Markets
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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 effect 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 agents generally earn their surplus by delaying the commons extinction, in unusual cases, strategic agents behave as competitive ones even when their numbers are small.
Keywords:
Strategic Equilibrium, Competitive Equilibrium, Rational Expectations Equilibrium, Markov Perfect Equilibrium, Autarky
Publisher:
ILMA UNIVERSITY
Published:
1 December 2005
Issue:
Issue 2 : Volume 1
E-ISSN:
2409-6520
P-ISSN:
2414-8393
This is an open access article distributed under the terms of the Creative Commons Attribution CC BY 4.0 license, which permits any use, distribution, and reproduction of the work without further permission provided the original author(s) and source are credited.