In the game in which two oil companies own adjacent oil fields, the companies will not use the oil efficiently because
A)neither company has a dominant strategy in the game.
B)the companies collude and produce a quantity of oil that is less than the socially-efficient quantity.
C)the pool from which they recover the oil is a common resource.
D)the pool from which they recover the oil is not large enough to allow both companies to earn a positive profit.

Question

Quizplus · Accepted Answer

The pool from which they recover the oil is a common resource, leading to over-extraction and inefficient use due to the "tragedy of the commons."

In the Game in Which Two Oil Companies Own Adjacent