Abstract

We reformulate the Verhulst-Lotka-Volterra model of natural resource extraction under the alternative assumptions of Cournot behaviour and perfect competition, to revisit the tragedy of commons vs the possibility of sustainable harvesting. We stress the different impact of demand elasticity on the regulator’s possibility of driving industry harvest to the maximum sustainable yield in the two settings. The presence of a flat demand function offers the authority a fully effective regulatory tool in the form of the exogeneous price faced by perfectly competitive firms, to drive their collective harvest rate at the maximum sustainable yield. The same cannot happen under Cournot competition, as in this case the price is endogenous and the regulator’s policy is confined to limiting access to the common pool.