Sequential Games of Resource Extraction: Existence of Nash Equilibria

A general model for noncooperative extraction of common-property resource is considered. The main result is that this sequential game has a Nash equilibrium in stationary strategies. The proof is based on an infinite dimensional fixed-point theorem, and relies crucially on the topology of epi-convergence. A byproduct of the analysis is that Nash equilibrium strategies may be selected such that marginal propensities of consumption are bounded above by one.

JEL Classification: 026, 632, 213, 721

Keywords: Sequential games, Dynamic programming, Fixed point theorem, Nash equilibrium, Common property, Natural resources, Common property