Trade, Tragedy, and the Commons

• Published in: The American economic review Vol. 99; no. 3; pp. 725 - 749
• Main Authors: Copeland, Brian R., Taylor, M. Scott
• Format: Journal Article
• Language: English
• Published: Nashville American Economic Association 01.06.2009
• Subjects: Access economies; Collective action; Developing countries; Economic efficiency; Economic models; Economic rent; Economic resources; Economic theory; Economics; Effectiveness; Enforcement; Equilibrium models; Fisheries management; Fishery economics; LDCs; Moral hazard; Natural resources; Open access; Prices; Property rights; Regulation; Renewable resources; Resource exploitation; Resource management; Sharing economy; Steady state economies; Studies; Trade liberalization; Tragedy; Transitions; Wildlife conservation
• ISSN: 0002-8282; 1944-7981
• DOI: 10.1257/aer.99.3.725

We develop a theory of resource management where the degree to which countries escape the tragedy of the commons, and hence the de facto property rights regime, is endogenously determined. Three forces determine success or failure in resource management: the regulator's enforcement power, the extent of harvesting capacity, and the ability of the resource to generate competitive returns without being extinguished. The model can explain heterogeneity across countries and resources in the effectiveness of resource management, and it predicts that changes in prices, population, and technology can cause transitions to better or worse management regimes.