Time to Switch: Different regimes and competitive management of natural resources

Abstract

The right management of the resources has become one of the hottest topics in the social debate. In order to give some insights on how to manage them correctly, we have extended a switching natural resources model. A Piecewise Closed-loop Nash Equilibrium differential game is studied, where agents decide the amount of the resource they extract and when to switch to a new and more efficient technology. We investigate different models introducing a renewable resource and then, they are extended under a more general utility function. Interior solutions are analysed. Our results are simulated, and a sensitivity analysis is performed to identify the effect of the renewable resource and the constant elasticity of substitution on the relevant variables of the model.