A game on the choice of policy variables in a dynamic resource management game

In this paper we develop a game theoretic approach to the non-cooperative management of a divided fishery where each subfishery is harvested by a sole-owner. This case study reveals many important problems in the theory of nonzero-sum differential games which have, so far, received minor attention in the literature. First we develop the steady state values of the reactions of one agent to given constant values of the policy variable of the other agent. These reactions depend on the policy variable as well as on its value. Three different policy variables are available to both agents. After obtaining these steady state Nash points a static non-cooperative game is played on the choice of policy variables. An example related to a transboundary Baltic herring fishery is used to illustrate the solutions.