Exogenous Productivity Shocks and Capital Investment in Common-pool Resources

Benjamin E Fissel and Ben Glibert

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: We model exogenous technology shocks in common-pool industries using a compound Poisson process for total factor productivity. Rapid di�usion of exogenous innovations is typical in the commons, but technology is rarely modeled this way. Technology shocks lower the equilibrium resource stock while causing capital buildup based on transitory pro�ts with myopic expectations. The steady state changes from a stable node to a shifting focus with boom and bust cycles, even if only technology is uncertain. A �sheries application is developed, but the results apply to many settings with discontinuous changes in value and open access with costly exit.

Keywords: technology shocks; Social and Behavioral Sciences (search for similar items in EconPapers)
Date: 2010-09-23
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Citations: View citations in EconPapers (2)

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