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Payments or persuasion: common pool resource management with price and non-price measures

Jason Delaney and Sarah Jacobson ()

No 2013-02, Department of Economics Working Papers from Department of Economics, Williams College

Abstract: We use lab experiments to study policies that address common pool resource overuse. We look at a price mechanism, specifically a Pigouvian subsidy, and four non-price interventions. The non-price policies are information alone, information with a normative message, communication alone, and normative messages with communication allowed. In all experiment sessions, no intervention occurs in the first seven and last seven rounds, allowing us to examine the effects of introducing and taking away a policy. The subsidy leads to near-efficient extraction, but surprisingly leads groups that were not over-extracting to also reduce extraction. This over-compliance decreases efficiency, although on net the subsidy is the most efficiency-enhancing intervention. Information provision, communication, normative appeals, and normative appeals combined with communication all reduce over-extraction (though by less than the subsidy) without exacerbating over-compliance; however, the effects of information alone and communication alone are small and not robust. The non-price policies cause a decline in over-extraction of from 0.549% (information) to 11.441% (normative appeals with communication). These effects are of the same order of magnitude as the effects seen in major field studies of conservation messaging. The subsidy has the worst persistence properties (after the intervention ceases), while normative messages with communication have the best.

Keywords: common pool resource; communication; information; Pigouvian subsidy; social norms; voluntary cooperation; laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 C92 D62 D83 H21 H41 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-08, Revised 2015-03
New Economics Papers: this item is included in nep-cbe, nep-env and nep-exp
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Journal Article: Payments or Persuasion: Common Pool Resource Management with Price and Non-price Measures (2016) Downloads
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