Non-parametric tests of behavior in the commons

Spencer Banzhaf, Yaqin Liu, Martin D. Smith and Frank Asche

Journal of Economic Behavior & Organization, 2024, vol. 224, issue C, 521-536

Abstract: Commons problems present behavioral dilemmas, with tensions between individual and collective rationality. When users of a common-pool resource are not effectively excluded, the collective behavior of individuals pursuing their self-interests dissipates economic surplus. We derive a non-parametric test of whether individuals' collective behavior in resource extraction is consistent with the canonical commons model, namely Nash tragedy-of-the-commons behavior. Our approach allows for an arbitrarily concave, differentiable production function of total inputs and for heterogeneous agents with arbitrarily convex, differentiable costs of supplying inputs. We extend the test to allow for unobserved total output. We also define distance from the data to the model and develop statistical tests using the distance metric. Applying our approach to panel data of Norwegian commercial fishing vessels, we find the results of our test are consistent with the economic intuition that, in the absence of property rights, tragedy-of-the-commons behavior dissipates surplus. Significantly, we find property rights reforms move firms away from Nash tragedy-of-the-commons behavior.

Keywords: Tragedy of the commons; Common property; Revealed preference; Non-parametric test; Linear programming; Fisheries (search for similar items in EconPapers)
JEL-codes: C14 C72 D21 D23 Q22 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:224:y:2024:i:c:p:521-536

DOI: 10.1016/j.jebo.2024.06.019

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