NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Non-Parametric Tests of the Tragedy of the Commons

H. Spencer Banzhaf, Yaqin Liu, Martin Smith, Frank Asche

NBER Working Paper No. 26398
Issued in October 2019
NBER Program(s):Environment and Energy Economics, Technical Working Papers

Extending recent results in the industrial organization literature (Carvajal et al. 2013), we de-rive non-parametric tests of behavior consistent with the tragedy of the commons model. Our approach derives testable implications of such behavior under any arbitrarily concave, differentiable production function of total inputs and when individual extractors of the resource have any arbitrary convex, differentiable cost of supplying inputs. We extend the tests to account for behavioral errors in observed data and derive statistical tests based on “how far off” the marginal costs are from those that are consistent with the model. We also extend the tests to allow for sampling error and/or measurement error. Applying our approach to panel data of Norwegian fishers, we find evidence rejecting the tragedy of the commons model. Significantly, we find that rejection rates of the model increase after property rights reforms moved the fishery away from the tragedy of the commons.

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Document Object Identifier (DOI): 10.3386/w26398

 
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