Self Enforcing Environmental Agreements, Delayed Information and External Enforcement in a Continuous Time Fish Wars Model with State Dependent Constraints

In this paper, we analyse a continuous time version of Fish Wars with the infinite time horizon and state dependent constraints on controls. We calculate the social optimum and a Nash equilibrium which always leads to the depletion of the resource even if the social optimum results in the sustainability. We propose two ways of solving the problems of enforcing optimality: either by a tax-subsidy system or by an environmental agreement even if we assume that it takes time to detect any defection of a player. We also propose a general algorithm of finding financial incentives enforcing the optimal profile in a large class of differential games