Abstract
This paper examines the incentive structure of the Collective Forest Management Plan (CFMP) from the perspective of game theory.There can be two Nash equilibria in a perfect information strategic form game model. In one equilibrium, the CFMP is made, but in the other it is not. It is needed for the former equilibrium to exist that there are plenty of owners who gain no more benefit by changing their strategies when the equilibrium is selected. When cooperative action is needed to make the CFMP, the latter equilibrium always exists. The higher the subsidy is, the more likely both Payoff Dominance criterion and Risk dominance criterion are to select the equilibrium with the CFMP. In contrast, the higher the payoff of status quo is, the more likely both criteria are to select the equilibrium without the CFMP. Maximin solution are likely to select the equilibrium without the CFMP. The model also implies that increasing the forestation subsidy and relaxing the forest size requirement can make the equilibrium with the CFMP exist more frequently, but the equilibrium with the CFMP can still exist.
