Recent Literature on the Economics of Common Pool Resources

UNIVERSITY OF CALIFORNIA, LOS ANGELES Department of Economics

Recent Literature on Economics of Common Pool Resources

The following is a collection of papers up to the Fall of 1998. I will attempt to update these lists annually. This initial draft casts a very wide net, looking for everything that has anything, even remotely, to do with common pool resources. Some less relevant citations will be dropped.

This inventory is intended for students in UCLA's graduate sequence in Environmental and Natural Resource Economics. The most recent update took place on February 17, 1999. CAUTION: while I try to ensure that updates overlap, I have discovered that my process occasionally misses a paper or yields duplicates. If your relevant published paper is not included, please let me know.

Agrawal, Arun, "Rules, Rule Making, and Rule Breaking: Examining the Fit between Rule Systems and Resource Use," in Ostrom, Elinor; Gardner, Roy; Walker, James. Rules, games, and common-pool resources. With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994, pages 267-82.

Benson, Bruce L., "Are Public Goods Really Common Pools? Considerations of the Evolution of Policing and Highways in England," Economic Inquiry; 32(2), April 1994, pages 249-71.

Abstract: A series of property rights alterations made by the English government undermined individuals' incentives to cooperate in the production of both policing and road maintenance, ultimately leading to government production. The result is more accurately characterized as a free-access common pool than as a public good. Common-pool analysis suggests an array of possible policy prescriptions involving the internalization of costs and benefits through privatization of rights. In contrast, the public-goods concept appears to be simply an ex post justification for claiming that the only efficient policy is public provision of these services at zero money prices.

Blomquist, William; Schlager, Edella; Tang, Shui Yan, "Mobile Flows, Storage, and Self-Organized Institutions for Governing Common-Pool Resources: Reply," Land Economics; 71(4), November 1995, pages 539-40.

Blomquist, William, "Changing Rules, Changing Games: Evidence from Groundwater Systems in Southern California," in Ostrom, Elinor; Gardner, Roy; Walker, James. Rules, games, and common-pool resources. With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994, pages 283-300.

Blomquist, William, et al., "Regularities from the Field and Possible Explanations," Ostrom, Elinor; Gardner, Roy; Walker, James. Rules, games, and common-pool resources. With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994, pages 301-16.

Bolle, Friedel, "On the Oligopolistic Extraction of Non-renewable Common-Pool Resources," Economica; 53(212), November 1986, pages 519-27.

Abstract: In recent literature the extraction of common-pool resources has been discussed under the aspect of whether or not they can be used efficiently when a finite number of agents has access to the resource. The objective of this paper is the derivation of a necessary equilibrium condition in a simple model. This condition has severe consequences for existence propositions in papers of M.C. Kemp and N.V. Long (1980), J. McMillan and H.W. Sinn (1984), and J.F. Reinganum and N.L. Stokey (1985).

Bolle, Friedel, "The Efficient Use of a Non-Renewable Common-Pool Resource Is Possible but Unlikely," Zeitschrift fur Nationalokonomie; 40(3-4), 1980, pages 391-97.

Brown, Gardner; Roughgarden, Jonathan, "A Metapopulation Model with Private Property and a Common Pool," Ecological Economics; 22(1), July 1997, pages 65-71.

Bruggink, Thomas H., "Third Party Effects of Groundwater Law in the United States: Private versus Common Property," American Journal of Economics and Sociology; 51(1), January 1992, pages 1-17.

Abstract: Groundwater is an increasingly important component in the nation's total water supply. Although groundwater is one of this nation's most abundant resources, falling water tables and contamination episodes have caused localized water shortages. This has led to news media accounts describing water supply as our nation's next natural resource crisis. The problem with groundwater supply can be attributed in part to the current system of incomplete property rights. This, in combination with the common pool characteristics of underground water and other third party effects, has resulted in technical and allocative inefficiency. Groundwater hydrology, common property, contamination, and other third party effects are examined in seeking the causes of the current water crisis.

Budescu, David V.; Rapoport, Amnon; Suleiman, Ramzi, "Common Pool Resource Dilemmas under Uncertainty: Qualitative Tests of Equilibrium Solutions," Games and Economic Behavior; 10(1), July 1995, pages 171-201.

Abstract: The Common Pool Resource (CPR) dilemma game is a single-stage noncooperative game in which n players share a CPR whose size, X, is a random variable with a commonly known probability distribution. We present the equilibrium solutions for CPR games in which X has a uniform distribution, players have power utility functions with a common parameter, c, and requests are made simultaneously or sequentially. Two experiments using groups of n = 5 players provide support for the major qualitative predictions of the model.

Callahan, Joseph M., "A Common Sense Approach to the Common Pool Groundwater Externality: Reexamining the User Cost Paradigm," University of California, Berkeley, Ph.D. 1993

Chakraborty, Rabindra Nath, et-al., "Community forestry in the Terai region of Nepal: Policy issues, experience, and potential," Reports and Working Papers 5/1997. Berlin: German Development Institute, 1997, pages v, 130.

Abstract: Explores the present and potential contribution of community forestry to sustainable forest use and poverty alleviation in the Terai region of Nepal. Introduces community forestry as an approach to common pool resource management. Provides background information on community forestry in Nepal, including the experience with community forestry in the hills and the conditions of community forestry in the Terai region. Reports on case studies of community forestry in Dhanusha District and in Banke District, which involved interviews with representatives of the Forest Administration, forest user groups, forest-related industries, and others. Assesses the potential for community forestry in the region and presents policy recommendations and implications for bilateral development cooperation. Coauthors are Ines Freier, Friederike Kegel, and Martina Mascher. No index.

Dayton Johnson, Jeff; Bardhan, Pranab, "Inequality and Conservation on the Local Commons: A Theoretical Exercise," University of California, Berkeley, Center for International and Development Economics Research (CIDER), Working Paper: C96/071, June 1996, pages 39.

Abstract: To analyze the effect of asset inequality on cooperation within a group, we consider a two-player noncooperative model of conservation of a common-pool resource (CPR): a fishery. We give necessary and sufficient conditions such that conservation is a Nash equilibrium, and we show that increasing inequality does not, in general, favor full conservation. However, once inequality is sufficiently great, further inequality may push the players closer to efficiency. We analyze the implications for conservation if players have earning opportunities outside the commons. Finally, we consider various schemes of community regulation of the commons in the light of the noncooperative model with or without exit options. We show that increasing inequality may restrict the range of implementable mechanisms.

Deacon, Robert T., "Rent-Seeking and the Common Pool," University of California at Santa Barbara Department of Economics Working Paper: 3-92, August 1991, pages 36.

Abstract: The act of withdrawing a resource from a common pool is modeled as a transaction, and in equilibrium the marginal transaction cost clears the market by equating supply and demand for the common resource. Given a transaction technology, the long-run equilibrium level of welfare is determined. The structure of the transaction cost can be affected by constraints on the inputs used to withdraw it from the common pool. Constraints that are optimal in the second-best sense of maximizing welfare, given that the resource itself is unpriced, are characterized. The model is then used to examine the welfare effects of several government policies that affect the individual's incentive to extract groundwater from the common aquifers. Several common government policies, such as efforts to improve the technical efficiency of pumps, attempts to reduce the percolation of applied irrigation water into aquifers, government provision of roads for shipping crops to market, and prescriptions to price surface sources of irrigation water at marginal cost, are found to reduce welfare in the long-run.

Deacon, Robert T.; Sonstelie, Jon, "Rent-Seeking and the Common Pool," Resources for the Future Energy and Natural Resources Division Discussion Paper: ENR90-13, April 1990, pages 28.

Abstract: It is well known that competition for rents associated with access to common property resources will dissipate at least part of these rents and clear the market for the resource. The demand for a common property resource depends on the cost of inputs required for using it and on the capacity to combine the resource with other inputs to produce valued final goods. This suggests that a second best strategy for limiting overuse of a common property resource may entail restrictions on the cost or use of other inputs. This paper examines such an approach to the efficient management of common property groundwater resources, e.g., by restricting complementary capital investment. A series of cases shows that the idea has practical relevance if first best management strategies are unattainable.

Gardner, Roy; Moore, Michael R.; Walker, James M., "Governing a Groundwater Commons: A Strategic and Laboratory Analysis of Western Water Law," Economic Inquiry; 35(2), April 1997, pages 218-34.

Abstract: The authors examine strategic behavior in groundwater depletion within the setting of state governance of groundwater resources in the American West. Solving a dynamic common-pool resource model for its optimal solution and its subgame perfect equilibrium provides benchmarks for behavior observed in laboratory experiments. Three forms of legal rules--common-pool depletion with a 'rule-of-capture' to establish ownership (absolute ownership doctrine), entry restrictions (prior appropriation doctrine), and stock quotas (correlative rights doctrine)--are examined in terms of their impact on individual strategic behavior in laboratory experiments.

Gardner, Roy; Moore, Michael R.; Walker, James M., "Racing for the Water: Laboratory Evidence on Subgame Perfection," Universitat Bonn Sonderforschungsbereich 303 - Discussion Paper: B-278, February 1994, pages 14.

Abstract: This paper examines strategic behavior in the context of a dynamic common-pool resource game with a unique symmetric subgame equilibrium. Solving the model for its optimal solution and its subgame perfect equilibrium provides benchmarks for behavior observed in laboratory experiments. Baseline experiments, which portray a "rule of capture" for establishing ownership with group size equal to 10, achieve an average efficiency of 30 percent. Experiments that restrict entry, with group size equal to 5, increase average efficiency to 44 percent. Experiments applying a stock quota show more marked improvement in efficiency, averaging 54 percent. The stock quota experiments come closest to producing data consistent with subgame perfection.

Hackett, Steven; Schlager, Edella; Walker, James, "The Role of Communication in Resolving Commons Dilemmas: Experimental Evidence with Heterogeneous Appropriators," Journal of Environmental Economics and Management; 27(2), September 1994, pages 99-126.

Abstract: Communication has been shown to be an effective mechanism for promoting efficient resource use in homogeneous common-pool resource settings. Communication allows appropriators the opportunity to agree on an aggregate appropriation target and coordinate over the selection of input allocation rules. When appropriators are identical, these rules result in identical input allocations, which facilitates cooperation. We examine the robustness of communication as an efficiency-enhancing mechanism in settings where appropriators differ in input endowments. This heterogeneity creates a distributional conflict over access to common-pool resources. This conflict can cause self-governance to fail. We present findings from a series of experiments where heterogeneous endowments are assigned: (1) randomly, and appropriators have complete information, (2) through an auction, and appropriators have complete information, and (3) randomly, and appropriators have incomplete and asymmetric information. These findings are contracted with rules from CPR field settings.

Hackett, Steven C.; Walker, James M., "Common Pool Resources: The Relevance of Laboratory Experimental Research," in Dinar, Ariel; Loehman, Edna Tusak, eds. Water quantity/quality management and conflict resolution: Institutions, processes, and economic analyses. Westport, Conn. and London: Greenwood, Praeger, 1995, pages 409-23.

Herr, Andrew; Gardner, Roy; Walker, James M., "An Experimental Study of Time-Independent and Time-Dependent Externalities in the Commons," Games and Economic Behavior; 19(1), April 1997, pages 77-96.

Abstract: The use of common-pool resources (CPRs) implies the existence of appropriation externalities. Benchmark predictions are derived and experiments conducted for a CPR game in which the appropriation externality is either time-independent or time-dependent. In the time-independent setting, externalities are restricted to within a decision period. In the time-dependent setting, externalities occur both within and across decision periods. Subject behavior is generally found to be consistent with noncooperative solution benchmarks. Further, efficiency tends to be lower in time-dependency settings, often with behavior that is best characterizes as temporally myopic.

Ito, Masaru; Saijo, Tatsuyoshi; Une, Masashi, "The Tragedy of the Commons Revisited: Identifying Behavioral Principles," Journal of Economic Behavior and Organization; 28(3), December 1995, pages 311-35.

Abstract: The theme of Garrett Hardin's renowned 'The Tragedy of the Commons' is that the common-pool resource is dissipated to the level where the average value of extraction equals the wage rate in the long run when the number of appropriators is unlimited. Yet experimental results and rapid deforestation in tropical countries follow a contrasting pattern: even though the number of appropriators is limited, the common-pool resource is dissipated more than the Nash equilibrium predicts. Given these market or experimental observations, the authors identify two behavioral principles--share maximization and difference maximization--and characterize these principles at Nash equilibrium.

Knerr, Beatrice, "Management of Common-Pool Forest Resources: Discussion Opening," in Peters, G. H.; Stanton, B. F., eds. Sustainable agricultural development: The role of international cooperation: Proceedings of the Twenty-First International Conference of Agricultural Economists, held at Tokyo, Japan, 22-29 August 1991.. Aldershot, U.K.: Dartmouth; distributed in the U.S. by Ashgate, Brookfield, Vt., 1992, pages 446-49.

Kramer, Randall A.; Ballabh, Vishwa, "Management of Common-Pool Forest Resources," in Peters, G. H.; Stanton, B. F., eds. Sustainable agricultural development: The role of international cooperation: Proceedings of the Twenty-First International Conference of Agricultural Economists, held at Tokyo, Japan, 22-29 August 1991.. Aldershot, U.K.: Dartmouth; distributed in the U.S. by Ashgate, Brookfield, Vt., 1992, pages 435-46.

Libecap, Gary D., Contracting for property rights, Political Economy of Institutions and Decisions series, Cambridge; New York and Melbourne: Cambridge University Press, 1989, pages ix, 132.

Abstract: Examines the process by which property rights institutions are formed. Illustrates the complexities of property rights formation in four natural resource industries in the American economy, synthesizing theory and history. Presents the analytical framework to examine contracting for property rights. Provides case studies that contrast different levels of success achieved in mitigating losses from the common pool--losses that occurred even though, in each case, there were large aggregate gains to be made from reaching agreement. Case studys involving the contracting for mineral rights and the contracting for federal range and timberlands focus on why private property rights to federal mineral lands were established rapidly and endorsed unabridged by the federal government, while private property rights to federal range and timberlands were much more difficult to establish politically. The remaining two cases, involving regulation of fishing and crude oil extraction, focus on the problems encountered among fishermen and oil producers in negotiations to devise rules for reducing rent dissipation. Concludes that swift institutional responses to common pool losses to promote more rational resource use and greater economic growth cannot be taken for granted. Index.

Libecap, Gary D., "Distributional Issues in Contracting for Property Rights," Journal of Institutional and Theoretical Economics; 145(1), March 1989, pages 6-24.

Abstract: This paper examines four political contracting efforts to change property rights in response to common pool problems with very different results. The cases include private mineral rights on federal land; fishery rights; and property rights to crude oil production in the United States. The analysis suggests that institutional change to promote rational resource use and economic growth cannot be taken for granted. To understand variation in property rights, attention must be directed to distributional conflicts and the side payments adopted to promote agreement.

Libecap, Gary D.; Wiggins, Steven N., "Contractual Responses to the Common Pool: Prorationing of Crude Oil Production," American Economic Review; 74(1), March 1984, pages 87-98.

McDonald, Stephen L., "The Hotelling Principle and In-Ground Values of Oil Reserves: Why the Principle Over-predicts Actual Values," Energy Journal; 15(3), 1994, pages 1-17.

Abstract: Two articles previously published in this Journal (Watkins 1992 and Adelman 1993) reported that the valuation version of the Hotelling Principle over-predicts in-ground values of oil and gas reserves by a factor of approximately two. This paper shows that these results are to be expected once it is understood that: (1) the Principle assumes individual operators have the effective freedom to schedule extraction rates so as to make net prices rise at the rate of discount, regardless of the course of gross (wellhead) prices; and (2) the long-prevailing system of regulating oil well spacing and extraction rates in the United States and Canada, designed to deal with the common pool problem, effectively denies operators that freedom. The discrepancy between actual in-ground values and those predicted by the Hotelling Principle suggests the benefits to be had by substituting compulsory reservoir unitization cum manager freedom for the current system of regulation.

Morrow, Christopher E.; Hull, Rebecca Watts, "Donor-Initiated Common Pool Resource Institutions: The Case of the Yanesha Forestry Cooperative," World Development; 24(10), October 1996, pages 1641-57.

Abstract: Several authors have drawn on case studies of successful common pool resource (CPR) institutions to develop principles for predicting when a CPR regime will form and the likelihood of its success once created (Ostrom, 1990). This paper examines the development and dissolution of the Yanesha Forestry Cooperative in the Palcazu Valley of Peru to test the relevance of Ostrom's CPR design principles to indigenous forest management regimes involving donor assistance and other external influences. The paper expands several principles and suggests ways in which external agencies can assist more effectively in the development of durable common pool resource institutions.

Ostmann, Axel et al., "Umweltgemeinguter? (With English summary.)," Zeitschrift fur Wirtschafts--und Sozialwissenschaften; 117(1), 1997, pages 107-44.

Abstract: Conventional economic theory has it that the commons are doomed to failure. The present paper discusses the rationale for this verdict, but then proceeds, in light of empirical evidence in favor of the potential sustainability of common pool resources, to a state of the arts summary of alternative modeling approaches. These approaches, whether they are from empirical economics or cognitive psychology, to mention a few disciplines, have in common that they do not treat common property resources as black boxes, as this is done in conventional economics. Thus, the paper provides a basis for further empirical research on its topic.

Ostrom, Elinor, Governing the commons: The evolution of institutions for collective action, Political Economy of Institutions and Decisions series, Cambridge; New York and Melbourne: Cambridge University Press, 1990, pages xviii, 280.

Abstract: Analyzes empirical examples of successful and unsuccessful efforts to govern and manage natural resources, critiquing the foundations of policy analysis as applied to many natural resources. Introduces the institutional approach to the study of self-organization and self-governance in common-pool resource situations. Focuses on cases of successful, long-enduring, self-organized, and self-governed management of common-pool resources, examining the organization of mountain grazing and forest common-pool resources in Switzerland and Japan, and some irrigation systems in Spain and the Philippines. Analyzes institutional change in the case of a set of institutions to manage a series of groundwater basins located beneath the Los Angeles metropolitan area. Investigates cases of institutional failure and fragility involving extreme rent dissipation, unresolved disagreements leading to physical violence, or resource deteriorations. Discusses, in this context, fisheries in Turkey; groundwater in San Bernadino County, California; and fisheries and irrigation systems in Sri Lanka. Considers the implications for the design of self-organizing and self-governing institutions. Ostrom is at Indiana University. Index.

Ostrom, Elinor; Gardner, Roy; Walker, James, Rules, games, and common-pool resources, With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994, pages xvi, 369.

Abstract: Uses both experimental and field data to test models of behavior in common-pool resource situations that are based on the theory of N-person, finitely repeated games. Tests the formal models in the controlled environment of an experimental laboratory to examine more closely the conditions under which the theoretical results predicted by noncooperative game theory are supported and where the theory fails. Reports on experimental studies dealing with appropriation behavior; probabilistic destruction of the common pool resource; communication in the commons; and sanctioning and communication institutions. Considers regularities from the laboratory experiments and possible explanations, focusing on why there was so much cooperation in the communication experiments. Edella Schlager, Shui Yan Tang, Arun Agrawal, and William Blomquist each present findings from four field settings--fisheries, irrigation systems, forests, and groundwater basins--to assess the generality of the findings from controlled experiments, and examine the institutional and physical variables that affect self-organization among common pool resource appropriators. Ostrom, Gardner, and Walker are at Indiana University. Bibliography; index.

Parry, Ian W. H., "Optimal Pollution Taxes and Endogenous Technological Progress," Resource and Energy Economics; 17(1), May 1995, pages 69-85.

Abstract: The optimal pollution tax becomes complicated when allowance is made for endogenous innovation, under a patent system. However, if anything, it is below marginal environmental damages, to counteract monopoly pricing by the patent holder, the common pool effect associated with research and a possible excess of patent holder revenue over the social benefits from innovation when environmental damages are convex. In cases where patents are weak at securing appropriability, for example when rivals can easily imitate around patented technologies, awarding research prizes or contracts is probably more efficient than raising the pollution tax.

Pena Torres, Julio, "The Political Economy of Fishing Regulation: The Case of Chile," Marine Resource Economics; 12(4), Winter 1997, pages 253-80.

Abstract: This paper analyzes how government action in Chilean fisheries has evolved over the last five decades, explaining why it followed the course it did. Weaknesses in the enforcement of access restrictions and recommended catch quotas are discussed. An in-depth study of the late 1980s reform of Chilean fisheries law allows us to discuss the relevance of information problems, distributional conflicts, and lobbying pressures from organized interest groups, when attempts are made to enforce more stringent quota policies. The legislation resulting from the late l980s reform process is consistent with regulatory capture effects. Overall, this paper adds evidence about the reasons for a prolonged persistence of inefficient institutional arrangements at marine industrial fisheries, in spite of increasingly scarce common-pool resources.

Price, Martin F., "Temperate Mountain Forests: Common-Pool Resources with Changing, Multiple Outputs for Changing Communities," Natural Resources Journal; 30(3), Summer 1990, pages 685-707.

Abstract: This paper broadens the concept of common-pool resources with reference to forests, which supply many joint products whose relative importance to different communities has changed over time. Case studies refer to forests in the Swiss Alps and Colorado Rocky Mountains. For each region, two levels of analysis are developed. These concentrate on outputs of wood, recreation and protection from natural hazards, and considers: 1) policy development for the two regions and a study area within each; and 2) the changing supply of forest outputs from the study areas within the context of changing policies and demands on the forests.

Rider, Robert, "Hangin' Ten: The Common-Pool Resource Problem of Surfing," Public Choice; 97(1-2), October 1998, pages 49-64.

Abstract: Surfers face a common-pool resource problem, similar to that faced by fishers. Although the ocean shore is a common-pool resource, each wave is a private good. Coordination is essential if a surfers' dilemma is to be avoided. The author's models this situation as a two-person, two stage game. He shows that for many cases the subgame perfect equilibrium is socially optimal. In other cases, the equilibrium is not optimal. The author argues that for these cases a surfers' etiquette has evolved in response to this dilemma. A first-to-the curl, first-in-right rule ameliorates but does not fully resolve the dilemma. In addition, a locals-only policy, a policy in violation of the surfers' etiquette, may be a rational response to a growth of inexperienced surfers on the waves.

Romano, Richard E., "Benefits of Competition for Patents," Information Economics and Policy; 4(1), 1989-90, pages 31-43.

Abstract: Patent races combine the common pool externality and nonappropriability of the full social return from a discovery. The former causes competitive researchers to invest more than if they collude. The latter reduces the incentive to invest in R&D. These countervailing incentives blur the social issue as to the desirability of research competition. We show that such competition is desirable where policymakers control the patent life. Research competition also simplifies the calculation of the optimal patent life. Specifically, the demand in the market where the discovery will be used need not be known. Moreover, absent control of the patent life, the desirability of research competition also obtains where policymakers instead control the degree of protection a patent confers.

Runge, C. Ford (Reviewer), "Review of: Rules, games, and common-pool resources," Journal of Economic Literature; 33(3), September 1995, pages 1393-1394. Book: Ostrom, Elinor; Gardner, Roy; Walker, James. Rules, games, and common-pool resources. With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994. [ISBN: 0-472-06546-7, pbk]

Savas, E. S., Privatization: The key to better government, Chatham House Series on Change in American Politics, Chatham, N.J.: Chatham House, 1987, pages xi, 308.

Abstract: Concerned with the background, theory, and practice and the steps toward successful privatization. Defines privatization as "the act of reducing the role of government, or increasing the role of the private sector, in an activity or the ownership of assets." Argues that privatization can be at least as compassionate as the welfare state and, when applied properly, offers even more for the less fortunate. Discusses the pressures for this process and reviews the growth of government. Examines the basic characteristics of goods and services, categorizing them as private, toll, common-pool, or collective goods. Clarifies the role of collective action in supplying each group. Describes ten different institutional arrangements for delivering these goods, ranging from the market place to government vending, and analyzes the different delivery arrangements possible for each category of goods. Examines privatization in practice, reviewing relative performance of different arrangements for cases of physical and commercial services and for protective and human services. Analyzes the implementation of privatization, discussing different techniques, contracting for services, and problems that are faced.

Schlager, Edella, "Fishers' Institutional Responses to Common-Pool Resource Dilemmas," in Ostrom, Elinor; Gardner, Roy; Walker, James. Rules, games, and common-pool resources. With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994, pages 247-65.

Schlager, Edella; Blomquist, William; Tang, Shui-Yan, "Mobile Flows, Storage, and Self-Organized Institutions for Governing Common-Pool Resources," Land Economics; 70(3), August 1994, pages 294-317.

Abstract: Common-pool resources are treated as if they were fully described by two characteristics--difficulty of exclusion and subtractability of yield. The authors focus upon two additional characteristics--mobile flows and storage in the resource. In examining common-pool resource settings involving fisheries, irrigation systems, and ground water basins, the authors find that users of these resources pursue different strategies and design different institutional arrangements depending upon whether the resource is characterized by mobile flows and/or storage. From this evidence, they develop a topology of common-pool resources that is useful for understanding and anticipating resource users' strategies in confronting and solving common-pool problems.

Selten, Reinhard, ed., Game equilibrium models II. Methods, morals, and markets," With contributions by D. Abreu et al. New York; Berlin; London and Tokyo: Springer, 1991, pages viii, 367.

Abstract: Eleven papers, in the second of a four-volume set of essays from a year-long research project at the Center for Interdisciplinary Research (ZiF) of the University of Bielefeld, examine the methodology of analysis of games, game-theoretic contributions to the fundamental ethical questions facing societies, and game-theoretic analyses of market environments. Contributions focus on the algebraic geometry of games and the tracing procedure; a perspective on renegotiation in repeated games; a conceptual discussion on supergames and folk theorems; the making of an effective game player; game theory and social contract; a game theoretic analysis of some aspects of contractarianism; irrigation institutions and the games irrigators play; equilibrium selection in the Spence signaling game; a game-theoretic analysis of interaction between resource extraction and futures markets; a framing effect observed in a market game; and experimental evidence of rent dissipation and balanced deviation disequilibrium in common pool resources. Contributors include economists, mathematicians, philosophers, and political scientists. Selten is at the Institut fur Gesellschaft- und Wirtschaftswissenschaften of the University of Bonn. No index.

Silvestre, Joaquim, "Public Ownership and Public Goods," Revista Espanola de Economia; 11(1), 1994, pages 101-38.

Abstract: The paper argues that efficiency is naturally associated with public ownership rather than with private ownership, in many instances involving public goods or externalities. It focuses on three themes: "Coase's Theorem," the "tragedy of the commons" and the role of ownership concentration in corporate decisions. The Coasian view sees private ownership as a condition for efficiency when externalities are present. But, as Ronald Coase has recently admitted, it is the absence of transaction costs, rather than the presence of initial property rights, that matters. Moreover, the literature on common pool resources documents the emergence of efficient arrangements in situations with ill-defined initial property rights. Some public bads are generated in the production process. Decisions based on the interests of a small group of shareholders will then typically be inefficient, whereas efficiency may result when ownership is appropriately shared among all citizens.

Silvestre, Joaquim, "Distributing the Benefits from the Commons: A Square-Root Formula," Scandinavian Journal of Economics; 100(3), September 1998, pages 627-42.

Abstract: What should be the distribution of the benefits of a fishery (or common-pool resource) where a group of fishers catch fish and sell it to consumers? The author proposes that, for each person i, where i is a fisher or a consumer, i's returns should be proportional to i's contributions. Unexpectedly, this implies that the fraction of benefits accruing to consumers must be equal to the square root of the value of total output of fish divided by (the square root of the value of total outputs of fish plus the square root of the value of total fishers' labor).

Smith, James L., "The Common Pool, Bargaining, and the Rule of Capture," Economic Inquiry; 25(4), October 1987, pages 631-44.

Abstract: Firms producing from a single oilfield face the common-pool problem: how to divide production and profits among themselves. The rule of capture creates competition am ong them to produce the oil before anyone else does and a tendency fo r overproduction. Private bargaining among the firms can avoid the wa steful production practices associated with the rule of capture and i ncrease joint profits. This paper explores the structure and expected outcome of the common-pool problem, and demonstrates that smaller pr oducers hold a bargaining advantage that is not easily overcome by la rger producers or neutral arbitrators.

Swallow, Brent M., "Mobile Flows, Storage, and Self-Organized Institutions for Governing Common-Pool Resources: Comment," Land Economics; 71(4), November 1995, pages 537-38.

Sweeney, Richard James; Tollison, Robert D.; Willett, Thomas D., "Market Failure, the Common-Pool Problem, and Ocean Resource Exploitation," Journal of Law and Economics; 17(1), April 1974, pages 179-92.

Tang, Shui Yan, "Institutions and Performance in Irrigation Systems," in Ostrom, Elinor; Gardner, Roy; Walker, James. Rules, games, and common-pool resources. With Arun Agrawal et al. Ann Arbor: University of Michigan Press, 1994, pages 225-45.

Taylor, Michael, "The Economics and Politics of Property Rights and Common Pool Resources," Natural Resources Journal; 32(3), Summer 1992, pages 633-48.

Thomas, J., "Cartel Stability in an Exhaustible Resource Model," Economica; 59(235), August 1992, pages 279-93.

Abstract: A simple oligopolistic common-pool exhaustible resource game is considered. By analyzing punishment strategies, including optimal punishments, it is possible to determine which cartel agreements are implementable in a noncooperative play of the game. Joint-profit-maximizing allocations are sustainable for sufficiently low discounting, but in general it is shown that no folk theorem exists for this model. In particular, for sufficiently high elasticities of demand, it is shown that optimal punishments are not sufficiently severe to enforce most stationary symmetric extraction paths, thus confirming the hypothesis that sufficient market power is needed for a cartel to be stable.

Todd, David, "Common Resources, Private Rights and Liabilities: A Case Study on Texas Groundwater Law," Natural Resources Journal; 32(2), Spring 1992, pages 233-63.

Abstract: In light of recent efforts to provide market solutions to environmental problems, this paper offers Texas groundwater law, use, and environmental effects as an example of the difficulties in defining, contracting, and enforcing private rights in common-pool resources. The paper first discusses the link from various environmental impacts, including drawdown, mining, saltwater intrusion, baseflow reduction, and land surface subsidence, to excessive groundwater use (Section 2). Excessive groundwater use is in turn attributed to the failure of private agreements to coordinate well sites and flow rates, to reduce groundwater demand, and to compensate any of those harmed by withdrawals. Sections 3-5 examine the private, judicial, and statutory factors that inhibit coordination or discourage agreements among private groundwater rights holders. Last, the paper suggests ways that Texas groundwater law can give lines of inquiry into other privately based forms of environmental regulation, such as that offered under the Clean Air Act (Section 7).

Toufique, Kazi Ali, "Institutions and Externalities in the Inland Fisheries of Bangladesh," Land Economics; 74(3), August 1998, pages 409-21.

Abstract: Establishment of property rights over inland fisheries of Bangladesh has been able to internalize appropriation externalities. However, the agents have failed to internalize provision problems due to the physical characteristics of the resource systems. The author has observed that the rules traditionally followed by the fishers are maintained and preserved by agents having exclusive property rights over the resource systems. The relationship between the agents and the fishers is not anonymous but of a patron-client type. Such outcome does not follow from the analysis of those who think that private property rights are the only solution to common-pool problems.

Walker, James M.; Gardner, Roy, "Probabilistic Destruction of Common-Pool Resources: Experimental Evidence," Economic Journal; 102(414), September 1992, pages 1149-61.

Abstract: Using experimental methods to test a game theoretic model of destruction in a common pool resource environment, this paper investigates whether the possibility of destruction will significantly alter choice behavior in the resulting game. When there is a nonnegligible probability of destruction at the subgame perfect equilibrium, the common pool resource is in every case destroyed and, in most cases, rather quickly. Even when there is a second subgame perfect equilibrium that is completely safe and yields near optimal rents, subjects do not stabilize at this equilibrium. The consequence of this destruction is in every case a significant loss in rents.

Walker, James M.; Gardner, Roy; Ostrom, Elinor, "Rent Dissipation in a Limited-Access Common-Pool Resource: Experimental Evidence," Journal of Environmental Economics and Management; 19(3), November 1990, pages 203-11.

Abstract: This paper examines group behavior in an experimental environment designed to parallel the conditions specified in noncooperative models of limited-access common-pool resources. Using experimental methods, we investigate the strength of theoretical models which predict that users of such resources will appropriate units at a rate at which the marginal returns from appropriation are greater than the marginal appropriation costs. Our results confirm the prediction of suboptimal accrual of rents and offer evidence on the effects of increasing investment capital available to appropriators.

Walker, James M.; Gardner, Roy; Ostrom, Elinor, "Rent Dissipation and Balanced Deviation Disequilibrium in Common Pool Resources: Experimental Evidence," in Selten, Reinhard, ed. Game equilibrium models II. Methods, morals, and markets. With contributions by D. Abreu et al, New York; Berlin; London and Tokyo: Springer, 1991, pages 337-67.

Wilson, James R.; Lent, Rebecca, "Economic Perspective and the Evolution of Fisheries Management: towards Subjectivist Methodology," Marine Resource Economics; 9(4), Winter 1994, pages 353-73.

Abstract: Some perspectives of neo-institutional economics are used to reexamine the common pool fishery. Applications of property rights theory in models simulating the evolution of fisheries management suggest that even in the presence of positive information and transactions costs (ITCs), resource users may have incentives to sequentially negotiate rules of common pool use. Such a result might imply that fisheries managers should be more concerned with ITCs than inefficiencies due to overcapitalization. This impression is further reinforced in collective choice examples taken from U.S. fisheries management. These comparative cases of public decision making in New England and Alaska suggest that variations in the style of public management as well as other aspects such as fleet heterogeneity might cause variations in management effectiveness. These variations in effectiveness may be related to the ITC environment internal to the public agencies, as well as to the external ITC environment they face.

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Last updated: February 17,1999
e-mail: tcameron@econ.ucla.edu