Drugs and pests

Cornes, Richard; Van Long, Ngo; Shimomura, Koji

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Drugs and pests

Date

2001

Authors

Cornes, Richard

Van Long, Ngo

Shimomura, Koji

Abstract

We model the non-cooperative choice of levels of inputs whose current usage results in the future decline in their effectiveness. We show that there are multiple equilibria that are Pareto rankable. Compared with the social optimum, lack of cooperation implies excessive use of input, leading to excessively rapid rates of decline in effectiveness. The harm is more pronounced when firms use Markov-perfect strategies, as compared with open-loop strategies.