The Dynamic Efficiency Costs of Common-Pool Resource Exploitation
American Economic Review · 2014 · Volume 104 · Issue 12
Abstract
We conduct the first empirical investigation of common-pool resource users' dynamic and strategic behavior at the micro level using real-world data. Fishermen's strategies in a fully dynamic game account for latent resource dynamics and other players' actions, revealing the profit structure of the fishery. We compare the fishermen's actual and socially optimal exploitation paths under a time-specific vessel allocation policy and find a sizable dynamic externality. Individual fishermen respond to other users by exerting effort above the optimal level early in the season. Congestion is costly instantaneously but is beneficial in the long run because it partially offsets dynamic inefficiencies. (JEL D24, Q21, Q22)
Keywords
Production, Cost, Capital, Total Factor, and Multifactor Productivity, Capacity, Renewable Resources and Conservation: Demand and Supply, Prices, Renewable Resources and Conservation: Fishery, Aquaculture
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