Output sharing in partnerships as a common pool resource management instrument

Stephan Schott, Neil Buckley, Stuart Mestelman and Andrew Muller

Environmental & Resource Economics, 2007, vol. 37, issue 4, 697-711

Abstract: Many economic environments are susceptible to either free-riding or overuse. Common pool resources (CPRs) fall in the latter category. Equally sharing the output of a CPR in partnerships introduces a free-riding incentive that may offset overuse. Socially optimal harvesting can be induced by dividing the set of resource users into a number of partnerships in such a way that each resource users’ tendency to over-harvest from the resource is exactly offset by his or her tendency to free-ride on the contributions of others. We conduct a laboratory experiment to assess the performance of this partnership solution by introducing equal-sharing subgroups of size one, four and six into a twelve-person CPR environment. Group assignment is either unchanging throughout a 15 period session or randomly mixed each decision round. Group size significantly affects aggregate effort, while group assignment makes no significant difference. The distribution of total payoffs is more equitable for randomly mixed groups. Implications of our results for voluntary and centralized implementations of the partnership solution are discussed. Copyright Springer Science+Business Media, Inc. 2007

Keywords: Common pool resources; Partners and strangers; Experimental economics; Collective action; Natural resource management; Q20; C91; D70; C92 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (20)

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DOI: 10.1007/s10640-006-9062-7

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