The dynamic efficiency costs of common-pool resource exploitation
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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.
Published Version (Please cite this version)10.1257/aer.104.12.4071
Publication InfoHuang, L; & Smith, MD (2014). The dynamic efficiency costs of common-pool resource exploitation. American Economic Review, 104(12). pp. 3991-4026. 10.1257/aer.104.12.4071. Retrieved from https://hdl.handle.net/10161/9293.
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George M. Woodwell Distinguished Professor of Environmental Economics
Smith studies the economics of the oceans, including fisheries, marine ecosystems, seafood markets, and coastal climate adaptation. He has written on a range of policy-relevant topics, including economics of marine reserves, seasonal closures in fisheries, ecosystem-based management, catch shares, nutrient pollution, aquaculture, genetically modified foods, the global seafood trade, organic agriculture, coastal property markets, and coastal responses to climate change. He is best known for id