The impact of sanctions on the exploitation of shared natural resources: A game theory approach

Abstract

Exploitation of natural resources such as oil and gas fields, coal and water basins are very important in the economic growth of countries. The importance of this issue for countries, especially the common natural resources, is twofold. Exploitation of common resources between countries is of particular importance due to its special role in economic growth, increasing stability, reducing political tensions and promoting cooperation between countries. This study focuses on modeling the exploitation of common natural resources through the design of a static game between two countries. The modeling performed addresses the effect of each country's share of the common resource and the impact of sanctions on the benefits obtained by both parties, using a mathematical approach. The results showed that the adoption of cooperation policy by each country depends on the share of each country and the level of sanctions imposed on the interested parties. In general, each country only adopts the policy of cooperation in the exploitation of common resources if the level of sanctions imposed against the other party is low and insignificant. In other words, increasing the level of sanctions drives countries towards adopting a non-cooperative policy.

Keywords

• L72
• F51
• C72
• C62