Non-Parametric Tests of the Tragedy of the Commons

• Departmental Seminar

Date and Location

Tuesday, February 5, 2019, 10:30 AM - 12:00 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities

Abstract

Extending recent results in the industrial organization literature (Carvajal et al. 2013), we derive non-parametric tests of behavior consistent with the tragedy of the commons. Our approach derives testable implications of such behavior under any arbitrarily concave, differentiable production function of total inputs and when individual extractors of the resource have any arbitrary convex, differentiable cost of supplying inputs. We extend the tests to account for sampling errors in observed data and derive statistical tests based on “how far off” the marginal costs are from those that are consistent with the model. Applying our approach to panel data of Norwegian fishers, we find evidence rejecting the tragedy of the commons model. Furthermore, results comparing policy regimes indicate effectiveness of property-rights-based management in moving fishing behavior away from Nash.