Do Static Externalities Offset Dynamic Externalities? An Experimental Study of the Exploitation of Substitutable Common-Pool Resources

Gastón Giordana, Marielle Montginoul and Marc Willinger

Agricultural and Resource Economics Review, 2010, vol. 39, issue 2, 19

Abstract: Overexploitation of coastal aquifers may lead to seawater intrusion, which irreversibly degrades groundwater. The seawater intrusion process may imply that its consequences would not be perceptible until after decades of accumulated overexploitation. In such a dynamic setting, static externalities may enhance the users’ awareness about the resource’s common nature, inducing more conservative individual behaviors. Aiming to evaluate this hypothesis, we experimentally test predictions from a dynamic game of substitutable common-pool resource (CPR) exploitation. The players have to decide whether to use a free private good or to extract from one of two costly CPRs. Our findings do not give substantial support to the initial conjecture. Nevertheless, the presence of static externalities does induce some kind of payoff reassurance strategies in the resource choice decisions, but these strategies do not correspond to the optimum benchmark.

Keywords: Institutional and Behavioral Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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Journal Article: Do Static Externalities Offset Dynamic Externalities? An Experimental Study of the Exploitation of Substitutable Common-Pool Resources (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:arerjl:90842

DOI: 10.22004/ag.econ.90842

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