activity choice labor allocation and forest use in malawi this article examines the determinants of activity choice affecting forest use among low income households in malawi data from three villages are used to estimate a system of household labor share equations for maize production forest employment and non forest employment a system estimation approach is used to identify factors influencing the competing and synergistic livelihood strategies which households undertake at the forest margin results from constrained maximum likelihood estimation indicate heightened incentives to degrade forests when returns to forest use are high factors reducing forest pressure include favorable returns to non forest employment secondary education of the household head and wealth

the influence of private contractual failure on regulation the case of oil field unitization an analysis of the interdependence between regulation and private contractual failure reveals that the feasible range of regulation is restricted by the same forces that block private agreement the focus of the study is oil field unitization regulation in oklahoma texas and wyoming federal lands from 1948 through 1975 despite large potential gains from unitization private negotiations fail because of lease heterogeneities and information problems regarding lease value estimates in response the federal and state governments have adopted strikingly different policies to encourage unitization with different results only the federal government s regulations are effective because they surmount information problems texas has the least successful regulation the paper argues that the policy differences are due to the political influence of small firms that benefit from nonunitized production 25 references 2 tables

testing the stochastic structure of production a flexible moment based approach conventional production function specifications are shown to impose restrictions on the probability distribution of output that cannot be tested with the conventional models these restrictions have important implications for firm behavior under uncertainty a flexible representation of a firm s stochastic technology is developed based on the moments of the probability distribution of output these moments are a unique representation of the technology and are functions of inputs large sample estimators are developed for a linear moment model that is sufficiently flexible to test the restrictions implied by conventional production function specifications the flexible moment based approach is applied to milk production data the first three moments of output are statistically significant functions of inputs the cross moment restrictions implied by conventional models are rejected

an optimal path to extinction poverty and resource degradation in the open agrarian economy this paper constructs a model of the open agrarian economy in order to explore the tendency of many such economies to evolve along paths characterised by severe environmental degradation it pays special attention to the importance of commodity prices and the transfer system in determining agricultural activity levels in ecologically delicate systems

economic development and environmental management in the uplands of southeast asia challenges for policy and institutional development using a philippine case study site the forces driving the recent evolution of economic behavior and institutional arrangements in upland and forest margin areas of southeast asia are considered in early modern development subsistence agriculture using long phase forest fallow rotations and regulated by customary law was replaced by more intensive commercially oriented farming systems a process heavily influenced by internal migration to the agricultural frontier traditional land and resource use institutions were quickly displaced during this shift both de facto through the actions of colonists and de jure through the state s assertion of ownership over forests and uplands and the introduction of private title to agricultural lands yet the effective implementation of natural resource use constraints lagged substantially behind the pace of agricultural development and forest exploitation resulting in a period in which high demand for such resources coincided with virtually open access these processes were noticeably subject to the influence of policies and reforms affecting markets prices and institutions

the windy commons wind power generation is growing rapidly in the united states doubling nearly every three years since 1998 yet wind is an open access resource and past experiences with open access resources suggest that tragedies of the commons may occur while the engineering literature has focused on turbine siting within a wind farm to maximize profits and minimize interaction effects the economics literature has overlooked interaction effects between windfarms we provide a qualitative framework for measuring wake externalities and use simulation modeling to determine their magnitude we find that a turbine wake externalities and thus losses to downwind sites increase with the square of wind velocity and can be substantial b decentralized ownership across wind farms leads to overcapitalization in upwind sites and undercapitalization in downwind sites relative to sole ownership c when multiple potential patches are considered more land will be used upwind for wind power under decentralized ownership and d numerical simulations suggest that total rents are reduced under decentralized ownership by up to 12 while total power produced increases by approximately 10 under our central parameters decentralized ownership may be preferred to a sole owner depending on the value society places on clean power relative to dirty power

appropriable rents from yellowstone park a case of incomplete contracting i introduction though the general populace accepts that national parks are and should be the domain of government the history of our first national park yellowstone reveals that from the beginning private entrepreneurs were actively involved in preserving the amenity values and capturing the amenity rents to appropriate the rents from yellowstone the early entrepreneurs had to carve the amenity values from the common domain or see them dissipated through open access without private ownership of the land this was accomplished through vertical integration of complementary inputs namely transportation services and tourist facilities necessary for the enjoyment of the natural amenities the extent of private sector success or failure in the history of yellowstone can be best understood in the context of the theory of the firm as developed by armen alchian his work with demsetz 1972 and with klein and crawford 1978 expands our understanding of how firms contract to appropriate rents and prevent postcontractual opportunism klein crawford and alchian 1978 300 distinguish between two reasons for vertical integration both of which apply to private firms operating in yellowstone at the time of its creation the first is the successive monopoly problem which occurs when two monopolists supply inputs into a final product or service and the second is postcontractual opportunism our purpose here is to apply these two important threads from the firm s contractual tapestry to the formation and operation of yellowstone national park the central theme is that amenity rents associated with the yellowstone region either could be dissipated through open access and the ensuing tragedy of the commons or appropriated through contractual arrangements that limited entry to the commons the former occurred until the northern pacific railroad with its monopoly on transportation services vertically integrated with monopoly suppliers of tourist facilities and operated the park as if it were privately owned 1 however the potential for rent dissipation still existed because the railroad did not own the park itself and could not effectively contract with the federal government to restrict entry therefore when the federal government opened the park to automobiles in 1915 the railroad s monopoly was eliminated and rent dissipation occurred through congestion ii brief history of yellowstone the natural features of the area that is now yellowstone national park were well known by 1860 following john colter s exploration of the area in 1807 numerous other trappers and later prospectors explored colter s hell in 1865 1870 and 1871 the first formal explorers financed in part by congress were sent to yellowstone these explorers provided scientific information photographs and paintings that increased the awareness in the east about the yellowstone area this awareness culminated in the creation of yellowstone national park by an act of congress on 1 march 1872 making it the first national park though yosemite had been established as a state preserve in 1864 early administration of the park was haphazard because the federal government provided no funds for operating expenses indeed many of yellowstone s natural features were being defaced until in 1886 the u s army assumed administrative responsibilities stationing a cavalry troop there the army stayed until 1918 at the time of yellowstone s creation the region was relatively inaccessible and sparsely settled but railroads changed this the northern pacific railroad completed its transcontinental line in 1883 and immediately added a sixty mile spur from livingston montana to yellowstone s northern entrance in 1903 the chicago burlington and quincy railroad gained access to yellowstone through cody wyoming and in 1908 the union pacific arrived at west yellowstone montana finally in 1915 the park was opened to automobile traffic

the tragedy of the commons in cote d lvoire agriculture expansion of cultivated land diminishes the extent of forestlands or reduces the length of fallow periods and hence reduces the amount of natural vegetation the increase in land under cultivation has a direct output increasing effect at the cost of reducing natural capital and agricultural productivity the evidence for western cote d lvoire is consistent with and provides an explanation for the declining agricultural productivity observed in sub saharan africa during the past few decades this article uses a theoretical model to determine the level of land cultivation that maximizes village income using data from cote d lvoire for 1985 87 an important part of the land is under common property usually at the village level the results show that farmers do not internalize even a small fraction of the external cost of biomass in their land allocation decisions the lack of internalization of the social cost of the biomass resource leads to large income losses at the village level as much as 14 perce

coping with asymmetries in the commons self governing irrigation systems can work many analysts presume that the appropriators of a common pool resource are trapped in a hobbesian state of nature and cannot themselves create rules to counteract the perverse incentives they face in managing the resource the logical consequence of this view is to recommend that an external authority the government take over the commons but considerable empirical evidence from field and experimental settings holds that appropriators frequently do constitute and enforce their own rules and that these rules work our research agenda is to develop a coherent understanding of the set of conditions that enhance or detract from self organizing capabilities when individuals differ substantially from one another for the sake of concreteness this paper focuses on the asymmetry present in most irrigation systems between those who are physically near the source of water the head enders and those who are physically distant from it the tail enders this paper first explores the interaction between head end and tail end farmers particularly their decisions about whether to devote resources to the upkeep of the irrigation system and how bargaining between the parties can benefit all sides finally we examine empirical evidence from a study of irrigation institutions in nepal and discuss the broader practical significance of our findings

fishery management under multiple uncertainty abstract among others who point to environmental variability and managerial uncertainty as causes of fishery collapse roughgarden and smith proc natl acad sci 93 1996 5078 argue that three sources of uncertainty are important for fisheries management variability in fish dynamics inaccurate stock size estimates and inaccurate implementation of harvest quotas we develop a bioeconomic model with these three sources of uncertainty and solve for optimal escapement based on measurements of fish stock in a discrete time model among other results we find 1 when uncertainties are high we generally reject the constant escapement rule advocated in much of the existing literature 2 inaccurate stock estimation affects policy in a fundamentally different way than the other sources of uncertainty and 3 the optimal policy leads to significantly higher commercial profits and lower extinction risk than the optimal constant escapement policy by 42 and 56 respectively

poverty and famines an essay on entitlement and deprivation this book focuses on the causes of starvation in general and famines in particular the traditional analysis of famines is shown to be fundamentally defective and the author develops an alternative analysis

information access income distribution and the environmental kuznets curve abstract recent empirical studies have tested the hypothesis of an environmental kuznets curve ekc focusing primarily on the relationship between per capita income and certain types of pollutant emissions given the stock nature of many pollution problems emissions only partially account for the environmental impacts moreover almost all of the studies have given consideration to little more than income levels as explanatory variables this paper empirically tests the hypothesis of the ekc existence for a stock sensitive indicator that is the percentage of protected area pa within national territory it does theorize that economic growth is a necessary condition in order to better address environmental issues but it also stresses that other variables income distribution education information accessibility may play a fundamental role in determining environmental quality contrary to other studies that mainly focus on the calculation of the income level corresponding to the transition point this paper is more concerned with the calculation of environmental quality corresponding to that transition point that is the minimum level of environmental quality that a country is willing to accept this paper highlights the idea that if the transition point is determined primarily by income level social policies determine the level of environmental quality corresponding to that point

instrument choice in a fishery abstract this paper considers the choice of regulatory instruments in a fishery fishing captains consumers and input suppliers each attempt to influence the regulator s choice of instruments the regulator chooses among instruments such as input restrictions entry restrictions or individual transferable quotas itqs regulatory instruments that result in zero fishery rents can only occur if the regulator places an extraordinary weight on the welfare of input suppliers relative to fishing captains and consumers indeed heterogeneity of fishing captains is neither necessary nor sufficient to obtain regulations that fail to generate fishery rents

factor demand under conditions of product demand and supply uncertainty the paper develops a theory of factor demand under uncertainty that encompasses neo classical factor demand and keynesian effective factor demand as special cases the model allows factor demand and output to move positively with product demand even with a constant product price this in turn permits real wages to move pro cyclically in response to product demand shocks in addition the model provides a new perspective on the adding up problem which posits that total factor payments exceed output if increasing returns to scale exist and generates positive uncertainty profits that are similar in spirit to those of frank knight

the competitive firm with uncertainty in the rate of labor turnover the adoption of more sophisticated production techniques usually requires firms to increase their expenditures on worker training and to pay greater attention to the costs of labor turnover economists are beginning to explicitly incorporate both training expenditures and the rate of labor turnover into the theory of the firm at the same time they are extending the theory of the firm to cases in which the firm faces uncertainty in its environment for example uncertainty in the price of output the prices of inputs or the quantity of output that a given input mix will yield this paper seeks to extend both of these areas of research by first introducing uncertainty in the rate of labor turnover and then examining the consequences of this new form of uncertainty for optimal training expenditures the optimal wage and the optimal level of output at the firm the paper assumes that the firm can increase output by providing workers with more training and can discourage turnover by paying workers a higher wage the quantities of labor and capital that the firm employs are held constant throughout the analysis it is found that the introduction of uncertainty in the rate of labor turnover results in lower optimal expenditures for both training and wages the reduction in training also reduces the level of output per worker at the firm comparative static analysis of ceteris paribus changes in the mean and variance of the labor turnover rate are also performed an increase in the mean of the turnover rate with the variance held constant reduces the wage and the amount of training provided also an increase in the variance of the turnover rate with the mean held constant reduces the wage and the amount of training provided a number of authors have considered models of the competitive firm in which the firm must determine its output level in the presence of uncertainty sandmo 13 batra and ullah 2 hartman 7 ishii 9 ingene and yu 8 flacco 5 and many others consider the behavior of the competitive firm facing uncertainty in its output price blair 3 ratti and ullah 12 stewart 15 perrakis 11 macminn and holtman 10 and many others consider cases in which the firm faces uncertainty in its technology or factor prices in all of these models it is assumed that the firm must make its input and output decisions before the uncertainty is resolved without ex

unemployment and the formation of duty free zones abstract a number of authors have suggested that the formation of a duty free zone may reduce the welfare of the host country their analyses assumed full employment for a country suffering unwemployment of the harris todaro type we show that the value of national output at world prices increases with the formation of a duty free zone which involves the reduction of tariffs on intermediate imports into the zone

dual economic growth in poor tropical areas abstract we consider a two sector model a modern sector and an extensive one with the extensive sector being highly dependent on natural vegetation cover as a factor of production in the extensive sector land tenure is not well defined we show that taxing the extensive sector as a whole and land intensive crops relative to labor intensive crops increases real income consumption in the short run however necessarily falls the cost of the adjustment is paid mostly by the poor when the extensive sector as a whole is taxed the distributional consequences of taxing the land intensive outputs however are ambiguous

the effects of well management and the nature of the aquifer on groundwater resources we compare groundwater use under collective well management in china where village leaders allocate water among households and under private well management where farmers either pump from their own wells or buy water from wells owned by other farmers villages are divided into connected or isolated groups depending on whether there are lateral groundwater flows between aquifers underlying a village and neighboring ones in rural china households under collective well management use less water even under collective management households located in connected villages use more water indicating that the connectedness of the aquifers may undermine leaders incentives to conserve water

the structure of a contract and the theory of a non exclusive resource the process of arriving at a useful concept of analysis is not only slow and painful but also may go astray and attain nothing useful someone begins with one example or observation followed by a theory which is intuitively plausible a theoretical term associated with a vague concept is coined examples of a seemingly different type emerge which call for another theory the process goes on as examples and theories continue to accumulate the different categories under the same heading of analysis serve only to confuse and each associated theory becomes ad hoc such has been the fate of the concept of externality a more useful approach i think is via contractual conditions the example chosen for illustration is marine fisheries where the fishing right is taken

common property and collective action in economic development abstract a fundamental issue in many ldcs is the degree to which natural resource mismanagement is caused by common property arrangements this view has led to widespread attempts to privatize forests rangelands and water resources many of these efforts have failed to stop overuse and have contributed to inequality in resource distribution this paper seriously questions this approach and describes a number of reasons why common property may continue to be both efficient and equitable complementing and combining with private rights in a way consistent with the resource endowments of village economies a theoretical approach is outlined showing that the tragedy of the commons is an unsatisfactory model of common property an alternative model is presented together with a call for research into institutional alternatives in resource management

contracting problems and regulation the case of the fishery the inefficiencies of common property fisheries are of continuing concern to economists the early work by scott gordon 1954 and anthony scott 1955 outlined the problem and later studies by james crutchfield and giulio pontecorvo 1969 and frederick bell 1972 provided empirical estimates of the losses that result those studies were followed by the dynamic models of colin clark 1976 and james quirk and vernon smith 1970 of optimal harvest rates and the use of corrective taxes or quotas to achieve them but in spite of a large and growing literature and the persuasiveness of the outlined efficiency criteria most fisheries retain common property aspects with overcapitalization and excessive labor input why those conditions persist and the failure of the regulatory response to them are the issues addressed in this paper we examine a number of fisheries but focus on the texas shrimp industry which is one of the nation s most valuable fisheries for a single species and which shares the common property characteristics observed elsewhere it is considered overcapitalized and catch per unit of effort is falling 2 examination of the fishery reveals the many margins along which rent dissipation occurs and the nature of the regulations necessary for controlling fishing effort to avoid those losses the regulatory environment in texas is complicated by conflict within the fishery between inshore and offshore fishermen the latter assert that bay shrimping reduces the number of shrimp that successfully migrate to the gulf the inshore fishery is highlighted by another issue the recent resettlement of some 30 45 000 vietnamese refugees including many fishermen along the texas coast marine advisory service paul starr their entry has been met by hostility and violence from existing shrimpers who recognize that they are in an environment characterized by the absence of property rights bay shrimpers have lobbied the texas legislature for broad limits on new entrants yet ironically the sale of additional boats by individual shrimpers to the vietnamese has facilitated entry of the refugees into the fishery regulations in the texas shrimp and other fisheries are incomplete leaving many options for rent dissipation uncontrolled because of high contracting costs among fishermen and political factors that mold government actions contracting costs are high among heterogeneous fishermen who vary principally with regard to fishing skill 3 montana state university and texas a m university respectively we benefitted from comments by terry anderson raymond c battalio gardner brown oscar burt micha gisser wade griffin john r moroney anthony d scott peter temin and participants in workshops at texas a m university and the university of washington research assistance was provided by scott barnhart and phil mizzi funding was provided by sea grant texas a m university throughout this paper we use the terms common property and open access interchangeably here the terms describe a situation where no property rights group or individual exist s for the resource 2catch per unit of effort in the inshore texas gulf and federal gulf waters is presented for 1963 77 by w l griffin c g tydlacka and w e grant they show catch per unit of effort generally falling in inshore and offshore waters while catch per unit of effort fluctuates from year to year it falls from approximately 360 kg shrimp per unit of effort to 220 kg from 1963 to 1977 the common property nature of the fishery is reflected in the following statistics since 1975 the number of vessels has grown by 23 percent nelson swartz for fish houses the record of entry is similar between 1970 a d 1977 the number of firms grew from 259 to 287 though during that period many left the industry as others entered the number of fish houses was calculated from license data supplied by the texas parks and wildlife department the record of entry by fish houses suggests that monopsony as discussed by colin clark and gordon munro is absent in the fishery 3there may be minor differences in labor leisure choices and capital but our statistical evidence and discussions with fishermen indicate that catch variations are largely due to skill government regulations in the texas bays restrict capital and our empirical evidence shows boats to be relatively homogeneous

alleviating soil erosion pollution stock externalities alternative roles for government abstract this paper addresses two temporal externalities due to agriculture soil erosion and related pollution the possibility of decentralization of decisions the appropriate role of a resource manager and the efficiency of alternative policies are examined using traditional welfare economics concepts for a two sector model of rural urban linkage three alternative types of policies can be socially efficient but imply different involvement by government and have different knowledge requirements a pigouvian policy requires full information a bargaining solution involves government only in setting an entitlement but it may require too much knowledge by rural households in terms of understanding dynamic environmental relationships a third way is that government and rural households be co producers of environmental goods this concept assigns government the responsibility for maintaining knowledge about environmental relationships and government is a participant in a market system that determines prices for environmental related goods

fairness stewardship and sustainable development abstract the welfare economic concept of fairness offers an attractive axiomatic foundation for the popular notion of stewardship fairness emphasizes the ex ante equal standing of all persons across and within generations this highlights the inextracability of poverty alleviation and environmental sustainability especially in the agrarian tropics where biodiversity loss deforestation and desertification are growing global concerns

fishery socioeconomics a survey fisheries management is constantly confronted and sometimes confounded by the complexities of real world fishery systems two major sources of such complexities are 1 the many conflicting goals and objectives faced by fishery managers and 2 the wide variety of socioeconomic factors which impact on the validity and effectiveness of regulatory instruments amongst the considerations lying within this fishery socioeconomics framework are distributional issues labor market structure social and opportunity costs fishing community dynamics and fishermen decisionmaking processes andersen 1978 fao 1985 fricke 1985 germa 1986 panayotou 1982 pollnac and sutinen 1979 while their importance is widely recognized little consensus exists regarding the manner in which such topics can best be incorporated into economic analyses and into fishery management decisions this paper reviews relevant literature on fishery socioeconomics addressing the questions what contribution can multi objective socioeconomic analysis play in fisheries economics and in practical fisheries management what insights can be obtained from existing socioeconomic research what specific questions need to be emphasized in future research an attempt is made to consolidate the research in this diverse area which has tended to develop somewhat independently from traditional resource economics theory and which has some clear connections to the ideas of institutional economics see e g wilson 1986 the paper is organized as follows section i explores the wide variety of objectives such as employment distributional concerns and rent generation which often play a practical role in real world fisheries whether or not they are expressed explicitly in fishery policy statements section ii reviews theoretical and empirical studies of income distribution wh le ection iii presents a broad examination of literature dealing with socioeconomic aspects of fishery management this involves both critiques of common management methods such as regulated property rights and limited entry schemes and examinations of alternative approaches such as cooperatives informal contracting and community property rights this leads into an exploration in sections iv and v of the social and opportunity costs for labor in fisheries and of related themes involving fishery labor markets the determinants of labor supply and the key issue of labor mobility section vi presents an overview of the literature concerned with fishermen and fishing community decision processes and behavioral dynamics the discussion is broadened in section vii to review data requirements in socioeconomic analysis and to provide perspectives on future priorities for research in fishery socioeconomics finally the paper ends in section viii with some general conclusions and some thoughts on the diffi ulties that have been faced in integrating socioeconomic research into economic analyses

an economic analysis of the fisheries bycatch problem abstract bycatch is the incidental take of a species that has value to some other group this paper compares open access and individual transferable quota equilibria to the equilibrium in which the joint value of the fisheries is maximized the open access induced problems can be corrected by an individual transferable quota system only if both the target species and the bycatch species have tradable quotas and only if the bycatch species does not have existence value there exists a range of the bycatch to target species harvest levels for which the total harvest of each will be exactly taken by a given technology even under open access however there may not even exist a unique open access equilibrium if bycatch is allocated by rule of capture prohibitions on the sale of bycatch reduce the bycatch level but they also reduce social welfare

state sponsored violence as a tragedy of the commons england s privateering wars with france and spain 1625 1630 the tragedy of the commons is the familiar problem that open access to a common property resource leads to overexploitation and to zero profits a commons model is applied to an example of state sponsored private violence the practice of privateering or licensed piracy it is predicted that the presence of uncertainty about the value of the prey will reduce the amount of exploitation effort and that industry profits may be positive due to both uncertainty and heterogeneous exploiters using data from england s wars with france and spain between 1625 and 1630 the model suggests that the commons represented by enemy merchant shipping was not overexploited and that privateering profits were positive the dynamic paths of privateering effort ships seized and individual firm profits were however consistent with the normal expectation that commons exploitation will peak and fall as competition drives down returns through entry

the nexus between gender collective action for public goods and agriculture evidence from malawi across the developing world public goods exert significant impacts on the local rural economy in general and agricultural productivity and welfare outcomes in particular economic and social cultural heterogeneity have however long been documented as detrimental to collective capacity to provide public goods in particular women are often underrepresented in local leadership and decision making processes as are young adults and minority ethnic groups while democratic principles dictate that broad civic engagement by women and other groups could improve the efficiency and effectiveness of local governance and increase public goods provision the empirical evidence on these hypotheses is scant this article develops a theoretical model highlighting the complexity of constructing a fair schedule of individual contributions given heterogeneity in costs and benefits that accrue to people depending for instance on their gender age ethnicity and education the model demonstrates that representative leadership and broad participation in community organizations can mitigate the negative impacts of heterogeneity on collective capacity to provide public goods nationally representative household survey data from malawi combined with geospatial and administrative information are used to test this hypothesis and to estimate the relationship between collective capacity for public good provision and community median estimates of maize yields and household consumption expenditures per capita the analysis shows that similarities between the leadership and the general population in terms of gender and age and active participation by women and young adult in community groups alleviate the negative effects of heterogeneity and increase collective capacity which in turn improves agriculture productivity and welfare

putting foxes in charge of the hen house the political economy of harvest quota regulations this paper considers a dynamic common agency model of natural resource harvest quota regulation in which both conservationists and harvesters vie to influence the regulator s quota allocations as well as the choice of regulator conservationists tend to benefit from the adoption of regulation since the regulator will reduce the aggregate harvest quota relative to the unregulated equilibrium harvesters however only support the adoption of regulation if the regulator places sufficient weight on their welfare because harvester s support of regulation is conditional while conservationist s support of regulation is unconditional harvester s interests tend to be over represented in the truthful markov perfect equilibrium

partial enclosure of the commons abstract we examine the efficiency distributional and environmental consequences of assigning spatial property rights to part of a spatially connected natural resource while the remainder is competed for by an open access fringe we refer to this as partial enclosure of the commons we obtain sharp analytical results regarding partial enclosure of the commons including 1 while second best it typically improves welfare relative to no property rights 2 all resource users can be made better off 3 positive rents arise in the open access area and 4 the resource maintains higher stocks under spatial heterogeneity we also characterize spatial regions that are ideal candidates for partial enclosure typically society should seek to enclose those patches with high environmental productivity and high self retention but whether high economic productivity promotes or relegates a patch may depend on one s objective

political authority expertise and government bureaucracies by applying the revelation principle we focus on how a sponsor who possesses political authority could minimise the efficiency losses when bureaucrats are experts that is when they control information about the true costs of public services production our results come in striking contrast to those in the literature on bureaucracies and public procurement in a two types setting and in the absence of monitoring and control mechanisms we find that the agency is productively efficient under certain conditions the agency is also allocatively efficient while under others the low cost bureau oversupplies and the high cost agency undersupplies its output

natural resources prices export policies and deforestation the case of sudan abstract environmental destruction is often the result of price policies for primary commodities that determine how individuals will use and abuse natural resources in this paper we analyze how domestic policies under colonial and independent governments in sudan contributed to acacia senegal deforestation and the demise of the international gum arabic trade when primary commodities are produced from environmentally beneficial species such as acacia senegal trees the impact of a declining market for the primary commodity will have economic and ecological repercussions on other sectors in the economy poverty and risk are central to this process

unraveling the multiple margins of rent generation from individual transferable quotas individual transferable quotas itqs induce changes along both the extensive margin via consolidation of quota among fewer vessels and the intensive margin as harvesters adjust their behavior to itq incentives we use itq introduction in the bering sea crab fishery to decompose the sources of rent generation across both margins we embed an empirically calibrated structural model of the harvesting process into a sector level model allowing us to experimentally unravel the itq treatment we show that the magnitude and source of rent generation under itqs critically depends on the manner and degree of rent dissipation before itqs are implemented

uncertainty and open access implications from the repeated prisoners dilemma game open access refers to situations in which individuals are not excluded from using a scarce resource where natural resources are concerned open access is usually believed to promote depletion as individuals rush to obtain as much as they can before other claims are made this phenomenon has been blamed for many important natural resource problems including overexploitation of fisheries johnson and libecap decimation of tropical forests by wood gatherers eckholm and excessive grazing on rangeland libecap and johnson in such cases the exercise of selfinterest runs counter to the collective interest of all resource users and if pursued generally is self defeating solutions to such problems must begin with restraints on the actions of interested parties but what will lead fishers or woodgatherers or shepherds to develop such restraints are the incentives for voluntary restraints sufficiently strong or must the restraints be imposed by authoritarian rules that can override individual interests i am interested here in whether uncertainty encourages or discourages voluntary restraint in the use of open access resources two types of uncertainty may influence the emergence of voluntary restraints first there is behavioral or strategic uncertainty individuals who are interdependent as in open access situations may be presumed to act based on their expectations of others actions if those actions cannot be perfectly predicted and assured each participant must plan according to some probability distribution over the actions available to others it has been argued that uncertainty may facilitate voluntary agreements among parties for whom noncooperative behavior is clearly rational and whose interactions are repeated axelrod and kreps et al this argument and its implications for open access resource problems are examined critically in the next section of this paper the second type of uncertainty stems from ature and markets for example forage or ish stocks may fluctuate from season to season from natural causes prices of livestock or fish may vary because of economic forces these exogenous sources of variability create uncertainty of outcomes apart from behaviors of others the importance of this kind of uncertainty is considered in the third section of this paper to assess the consequences of these sources of uncertainty i refer to the repeated prisoners dilemma game e g axelrod kreps et al and taylor in this framework pursuit of self interest is always dominant economically in the short term although it results in suboptimal collective returns the stark conflict between individual and collective interests appears to reflect conditions with open access however three major limitations of the model should be noted at the outset first it allows only for binary choices and a fixed number of players many open access problems involve continuous choices and an unrestricted number of players second the game does not permit forward contracting or side payments between individuals this precludes many devices used in reality to facilitate voluntary transactions third the game remains the same period after period no intertemporal externalities are reflected these john b braden is an associate professor department of agricultural economics university of illinois this research has been supported by grants from the illinois agricultural experiment station no 1 6 53491 and the illinois water resources center no 1 11381 uncertainty is used here interchangeably with risk both refer to variability of outcomes due to forces beyond an individual s control

foreign direct investment education and wages in indonesian manufacturing this paper examines whether the higher wages paid by foreign owned manufacturing plants than by domestically owned plants typical of most countries represents a higher price for labor that is does it reflect a higher price for workers of a given quality as represented by the level of education we then ask whether foreign owned plants pay a higher price for labor given the characteristics of the plants foreign owned firms are found to pay a higher price for labor of a given educational level than domestically owned ones only a part of the difference is associated with plant characteristics rather than ownership

reassessing the gender wage gap in madagascar does labor force attachment really matter abstract in the labor economics literature it has been argued that differences in labor force attachment across gender are important to explain the extent of the gender wage gap however measures of women s work experience are particularly prone to errors given discontinuity in labor market participation using proxy measures such as potential experience may lead to biased estimates of the returns to human capital such biases cannot be ignored since these returns are used in the standard decomposition techniques to measure the extent of gender based wage discrimination by matching two original surveys conducted in madagascar in 1998 a labor force survey and a biographical survey we built a unique data set that enabled us to combine the original information gathered from each of them particularly the earnings from current employment and the entire professional trajectories our results lead to a reassessment of the returns to human capital as potential experience always exceeds actual experience for b

the demise of the rent controlled public housing programmes of ghana the story of the tema development corporation in 1952 a new town called tema was created in ghana the master plan for tema made provision for 19 planned communities each having roughly 1500 2000 homes about 6355 housing units are government owned rental housing the rental housing stock is the subject of this study this paper reports an empirical study that shows that rent controls coupled with public management have caused investment values in the rental housing stock to disappear for example this study finds that the nominal rate of return on total investment for these rentals based on replacement value has a mean value of only 3 per cent with inflation rates around 15 per cent during the study period this implies a negative real rate of return the findings provide empirical support and justification for recent attempts to privatise all rental public housing in ghana the study concludes with public policy recommendations

property rights externalities and resource degradation locating the tragedy abstract resource degradation in the third world is largely driven by the demands of farm households for fuelwood and land for agriculture since resources are often controlled through indigenous systems of property the tragedy of the commons has been used to explain resource degradation as a result private property is suggested as a solution to resource degradation a dynamic model capable of examining household incentives for resource use under private and common property is developed results of the model reject the conventional wisdom that gives rise to the presumed optimality of private individual property in natural resources and the correlated indictment of group management regimes

renewable natural resource management and use without markets natural resources by their nature are not readily bent to the status of private property efficient resource use is complicated by jurisdictional externalities public goods non use values and beneficiaries spatially separated from the location of resources the task is made more challenging by ecological complexity that obscures cause benefits and effects costs and dramatic time lags between individual actions and subsequent social consequences that together with substantial uncertainty introduce the chance of irreversibilities resource economists have played a major role in the literature on externalities the development of individual transferable quotas non market valuation techniques and common property management

strategic interdependence in models of property rights the concept of strategic interdependence has opened a wide spectrum of explanation beyond the robinson crusoe economy this essay explores the implications of strategic interdependence for the theory of property rights and the new institutional economics schotter it attempts to clarify some of the linkages from institutional economics to micro and macroeconomic theory by considering how property institutions result from strategic interdependence confer payoffs to individual agents and reflect collective choices based on individual preferences

chance constrained financing as a response to financial risk the results of a recent survey suggest that many decision makers view financial risk in a safety first context imposing safety first chance constraints on potential financial ratios or flows can be difficult with traditional methods this is particularly true with financial ratios when both the numerator and denominator are random and are affected by endogenous decisions a model and numerical example are presented which enforce probabilistic or chance constraints upon potential debt asset ratios in a multiperiod linear program the model can be easily modified to probabilistically constrain alternative financial performance measures such as current ratios working ratios or cash flows

environmental externalities in traditional agriculture and the impact of trade liberalization the case of ghana abstract this paper provides a framework for the evaluation of trade policies that explicitly considers the effects of such policies on the environmental resources biomass in doing this we estimate the effects of biomass as a factor of agricultural production and test the hypothesis that farmers efficiently exploit biomass a resource held in common property the main findings are i biomass is an important factor of production in ghanian agriculture ii the biomass resource is exploited beyond the socially optimal level iii a deepening of trade liberalization is likely to induce further losses of biomass and deforestation and iv national income is likely to fall in response to further trade liberalization

property rights to multi attribute fishery resources abstract the united nations code of conduct for responsible fisheries urges governments to manage multiple yield bycatch and habitat attributes of fishery resources the information and enforcement costs of multi attribute management are high however as a result relatively few attributes generally stock biomass age structure and growth are specified in yield targets exposing others e g localized abundance sex to excessive use in the public domain spillovers caused by fishing gear e g gear conflicts bycatch habitat damage generally are regulated with catch limits and area closures that artificially divide or exclude activities which interact due to attribute jointness total fishery income is compromised because tradeoffs are not evaluated at the margin alternative arrangements that bundle fishery resource attributes are suggested bundled property rights could evolve from a comprehensive assignment of usufruct rights which reduce the transaction costs of gathering information on unspecified attributes and of contracting for spillovers markets for harvest rights could resolve the simpler gear conflict and bycatch problems other interactions e g predation habitat requirements would require corporate or collective property rights and governance arrangements that make harvesters and other interested parties the residual claimants of their harvest decisions subject to government restrictions that protect public goods

the african growth and opportunity act and the global commodity chain for clothing abstract this paper examines responses to the african growth and opportunity act in sub saharan africa s clothing sector the paper reviews statistical evidence on supply response as well as presenting recent fieldwork findings from southern africa using a modified version of global commodity value chain analysis it argues that while there has been a significant level of response this has been largely confined to enterprises of a particular type the latter has evolved globally in relation to the specificities of the us clothing market this has consequences both for chain analysis and for broader debates concerning industrial upgrading and trade vs aid

integration and productivity satellite tracked evidence this paper introduces satellite tracked real time data from a large fishing firm managing its vertically horizontally and geographically linked ships to study the causal impact of integration on total factor productivity tfp after the firm acquired its vertically unintegrated contractual fish suppliers tfp increased 16 among newly integrated ships whereas it did not vary for already owned ships some classic mechanisms such as increased effort due to monitoring do not systematically explain tfp gains under integration whereas evidence on hold up threat alleviation is mixed importantly enhanced knowledge transfer and hierarchical authority enacting productivity improving operational practices among newly integrated ships are more likely explanations of the results this paper was accepted by bruno cassiman business strategy

common pool resource appropriation under costly cooperation abstract in addition to the usual fixed costs we introduce variable costs in a community s effort to cooperate in extracting from a common pool resource using a standard supervision mechanism these variable costs are shown to be an increasing function of individual members incentives to default the model explains why we frequently observe communities that all cooperate and have relatively similar resource endowments and yet achieve very different levels of extraction

economy and environment a theoretical essay on the interdependence of economic and environmental systems preface notation guide 1 introduction part i the physical economy environment system 2 closed physical systems a model 3 structure and time in the physical system 4 technological change and the environmental constraints to physical growth part ii the economic system 5 the price system 6 prices property and the environment 7 economic conflict and environmental change part iii environmental strategies in an evolutionary economy environment system 8 time uncertainty and external effects 9 the market solution 10 the stationary state 11 conclusions references index

economic spillovers in spatial harvest behavior abstract there has been a strong push within natural resource management to incorporate spatial structure into management regimes however discussions surrounding the appropriate designs of spatial management have largely been conceptual this paper develops a spatial econometric model of fishing location choice using non confidential data from the great barrier reef coral trout commercial fishery harvest location decisions are modeled as a function of spatial patterns of expected economic returns the preferred spatially dependent econometric model is shown to outperform ordinary least squares and fixed effects models in out of sample forecasting estimates from the spatial model reveal spatial spillover effects in fleet harvest location behavior in particular harvest activity at any given site is equally sensitive to same site economic returns and surrounding site economic returns the econometric results are illustrated using a fee based policy simulation results suggest non spatial management is characterized by two inefficiencies first heterogeneity between sites is averaged resulting a fee that is too high or too low across space second fees that are too high or too low affect the fishing effort in nearby locations

inequality and conservation on the local commons a theoretical exercise to analyse the effect of asset inequality on co operation within a group we consider a twoplayer nonco operative model of conservation of a common pool resource overexploitation by one user affects another s payoff by reducing the next period catch we give necessary and sufficient conditions such that conservation is a nash equilibrium and show that increasing inequality does not in general favour full conservation however once inequality is sufficiently great further inequality can raise efficiency thus the relationship between inequality and economic efficiency is u shaped finally we analyse the implications for conservation if players have earning opportunities outside the commons the daily livelihood of vast masses of the rural poor in many countries depends on the success with which common pool resources cprs such as forest resources grazing lands in shore fisheries and irrigation water are managed and on the environmental consequences of their management understanding the factors that lead to success or failure of community management of these resources is thus critical to rural development cpr management is a collective action dilemma a situation in which mutual cooperation is collectively rational for the group as a whole but individual cooperation is not necessarily individually rational for each member one factor that has not always been recognised as critical to the outcome of collective action dilemmas is heterogeneity among the resource users in this paper our attention will be largely restricted to a single but potent kind of heterogeneity inequality in asset ownership olson 1965 hypothesised that inequality might favour the provision of a public good

a reconsideration of the welfare economics of a free trade zone abstract this paper presents a model of a free trade zone which incorporates the fact that such zones are often established by government subsidies designed to promote non traditional exports in our model the condition is derived under which the establishment of a free trade zone can increase welfare regardless of the relative factor intensity of a zone based industry however the relative factor intensity of a free trade zone plays a crucial role in determining the change in welfare following economic growth and foreign investment

on the sustainability of common property resources abstract we provide a model where a common property resource is managed by two types of agents cooperators and non cooperators who adjust their extraction strategies in response to persistent differential payoffs in our model the social approval of cooperators works as a reward mechanism which as we show favors both the pervasiveness of cooperative behavior and the sustainable management of natural resources specifically we show that in the presence of such a reward mechanism a stable equilibrium can be reached with both strategies being practiced simultaneously and a decentralized and sustainable management of common property resources is possible

a flexible assurance bonding system for improved environmental management abstract current methods of regulating activities that are known or suspected to be environmentally danaging are not working well they induce legal confrontation obfuscation and government intrusion into the inner workings of firms they tend to suppress technical and social innovation aimed at long term solutions they do not mesh well with the market signals that firms use to make decisions this paper discusses some of the underlying reasons for this problem and outlines a flexible environmental assurance bonding system designed to incorporate environmental criteria and uncertainty into the market system and to induce positive environmental technological innovation in addition to direct charges for known environmental damages an assurance bond equal to the current best estimate of the largest potential future environmental damages would be levied and kept in an interest bearing escrow account the bond plus a portion of the interest would be returned if and only if the firm could prove that the suspected damages had not occured or would not occur if damages did occur the bond would be used to rehabilitate or repair the environment and to compensate injured parties by requiring the users of environmental resources to post a bond adequate to cover potential future environmental damages with the possibility for refunds the burden of proof is shifted from the public to the resource user and a strong economic incentive is provided to research the true costs of environmentally innovative activities and to develop innovative cost effective pollution control technologies

technical change in agriculture and land degradation in developing countries a general equilibrium analysis this paper analyzes the role of economic linkages between upland agriculture lowland agriculture and other sectors in developing economies and the potential for welfare enhancing shifts from more to less erosive upland land use patterns comparative statics results are obtained from analytical and numerical general equilibrium models they indicate that the green revolution in lowland agriculture helped alleviate upland land degradation and that policies aimed at slowing land degradation through technical progress in upland crops may have the opposite of their intended effects the results highlight the need for integrated policy packages to reduce upland land degradation in developing countries

the africa growth and opportunity act and its rules of origin generosity undermined the african growth and opportunity act agoa signed into american law on may 18 2000 is a major plank of u s initiatives toward the african continent the act aims broadly at improving economic policymaking in africa enabling countries to embrace globalization and securing durable political and economic stability as an incentive for africa to adopt the necessary policy reform agoa offers increased preferential access for african exports to the united states this paper describes the provisions of agoa and assesses its quantitative impact on african exports particularly in the apparel sector its main conclusions are 1 agoa will provide real opportunities to africa even on conservative estimates about africa s supply response africa s non oil exports could be increased by about 8 11 percent 2 however the medium term gains could have been much greater if agoa had not imposed certain conditions and not excluded certain items from its coverage the most important condition is the stringent rule of origin that is the requirement that exporters source certain inputs from within africa or the united states estimates suggest that the absence of these conditions would have magnified the impact nearly five fold resulting in an overall increase in non oil exports of us 0 54 billion compared with the us 100 us 140 million increase that is expected in the presence of these restrictions these restrictions particularly on apparel will come at a particularly inopportune time as africa will be exposed to competition from other developing countries when the quotas maintained on the latters exports under the multi fiber arrangement mfa are eliminated africa s apparel exports will be lower by over 30 percent with the dismantling of the mfa if on the other hand agoa had provided unrestricted access the negative impact of the dismantling could be nearly fully offset

restraint under open access are voluntary incentives sufficient or is coercion required discussion in describing the inefficiencies of open access fisheries earlier writers e g gordon relied heavily on some simplifying assumptions in particular it was assumed that inputs effort were homogenous and their supply to the industry was perfectly elastic the potential for cooperation among the individual participants was ignored the end result after some hand waving was that entry would lead to the complete dissipation of the rental value of the resource this particular open access model with its average product argument has been applied to other resource areas and is widely evident in the public choice literature despite the widespread application of the model there remains skepticism about its predictive powers and the policy implications drawn from it three of the four papers presented at this session are reflective of that skepticism in that regard they are not alone one can for example find numerous anthropological studies arguing that communities have on occasion established informal arrangements for controlling entry and the use of resources in such areas as fishing and grazing a distinctive feature of many of those studies is a cautious approach to the full dissipation implication found in the traditional open access model the traditional model has been criticized because it ignores the potential for cooperation and instead treats producers as though they were a sack full of ornery cats johnson p 246 furthermore challenges to the complete dissipation argument are not restricted to anthropological literature experiments involving finite repetition of the prisoners dilemma game suggest that players do not always follow the single period dominant strategy defection instead they achieve some measure of cooperation finally there is the existence of institutions such as nature groups who finance the purchase of lands even where benefits accrue to numerous individuals who were not a party to the transaction in those cases it appears that the free rider problem does not completely dominate the outcome if however full dissipation does not occur does it then follow that some form of explicit cooperation with internally imposed rules and sanctions has evolved the answer appears to be no first individual participants may not be homogenous and thus the supply function of effort is not perfectly elastic in that case the rental value of the resource need not be

modeling effort and lobbying in a heterogeneous common pool resource setting extraction from a common pool resource cpr such as a fishery can lead to socially inefficient and undesirable outcomes as a result of appropriation problems through regulation of the cpr users may achieve a more profitable and socially efficient outcome feeny et al land econ 72 2 187 205 1996 delve into some of the assumptions made by traditional cpr models and how use of those assumptions provides an incomplete framework to guide fishery policy in the theoretical models we develop we relax two of those assumptions cpr users are homogeneous and are unable to create or influence management of the resource we note a case where regulation of the individual user can induce others to harvest more and relate this to the slippage effect concept regarding resource sustainability we document situations where incentives exist for cpr users to lobby for tighter regulations and thus increase profits by limiting the tragedy of the commons influence

behavioural and material determinants of production relations in agriculture in this essay we develop a framework for analysing the major institutions governing the production and exchange of output and the primary factors of production in rural areas the analysis incorporates general considerations of risk and information constraints jointly with the principal material attributes of agriculture and of agricultural production factors the framework is used to analyse barriers to the existence of the major intertemporal and factor markets it is applied specifically to land scarce environments for which it provides an internally consistent explanation for many of the well documented institutional features of such settings in addition the analysis provides new implications for among other phenomena the inter relationships among ownership holdings operational scale family size and factor productivity for the scarcity of animal rental markets and use of animals as collateral for the renting out of land by small landowners and for the existence of plantations for certain crops

explaining state bans on corporate farming state laws banning corporate farming present a puzzle for a rent seeking explanation of political outcomes since family farmer proponents may receive no direct benefit from these bans an explanation developed here is that these farmers benefit indirectly forestalling corporate entry preserves the farm political coalition structured around those cooperatives patronized by family farmers and so indirectly preserves federal subsidies and supply restrictions that the incidence of state bans is positively related to the importance of federal farm programs the importance of cooperatives and the homogeneity of farmers within a state is consistent with this indirect rent seeking explanation

on induced economic change in precapitalist societies abstract this essay explores a number of properties of a general growth model of induced economic change in precapitalist societies which incorporates both the insights of ester boserup and thomas malthus responses to diminishing returns include changes in work intensity and population growth some important variants of the model are also examined which focus on the transfer of production to non producers and on alternative processes by which change is induced the results are used to generate some parameters influencing the political stability of non working elites to criticize some previous less general growth models and to suggest some fruitful lines fot future empirical research on economic development in the long run

the ambiguous impact of inequality on local resource management abstract the impact of inequality on the ability of human groups to undertake successful collective action is investigated with special reference to overexploitation of common property resources in voluntary provision problems on the one hand inequality has an ambiguous impact on the feasibility of the efficient outcome even though better endowed agents contribute more to collective action in regulated settings on the other hand inequality tends to reduce the acceptability of available regulatory schemes and therefore to make collective action more difficult

macro scale economic influences on tropical forest depletion abstract the paper examines the influence of global and domestic factors on forest depletion in 45 tropical developing countries from 1967 to 1985 it links forest depletion with conditions in the international markets and with domestic macroeconomic and demographic factors calculated elasticities suggest that real exchange rate devaluation debt service food self sufficiency income and export prices of forestry and agricultural output had significant influence on the depletion of tropical forests during the study period

the failure of government sponsored cartels and development of federal farm policy even today most important enduring monopolies or near monopolies in the united states rest upon government policies the government s support is responsible for fixing agricultural prices above competitive levels for the exclusive franchises of public utilities and radio and tv channels for the single postal service the list goes on and on george j stigler 1993 399 i introduction it is often believed that the coercive power of government can overcome the negotiation and enforcement problems that plague private cartels 1 this claim is made in standard microeconomics text books such as hirshleifer s 1984 262 and it is an integral part of the economic theory of regulation stigler 1971 posner 1974 regulation can have the same effect as a successful cartel it raises prices above competitive levels indeed posner 1974 344 46 argues that it may be less costly for industries with large numbers of firms to obtain supportive government regulation than to privately form a carte 2 by capturing regulatory agencies industry can use the state for its own purposes 3 although broadly correct the view that government sponsorship is an effective mechanism for the successful formation of cartels neglects the costs of organizing the industry into an effective lobby group and the costs that politicians face as they attempt to define and enforce total output levels and individual quotas especially in those cases where the industry is large and heterogeneous and hence most needing of government assistance are these costs likely to be significant under these circumstances the industry will lack a consensus on total production targets and firm quotas where the cuts must be large in order to reach price setting goals quota definition and enforcement will be controversial and political opposition will be intense these conditions provide incentives for politicians to modify cartel goals and to seek alternative ways of raising industry prices and incomes accordingly classic government sponsored cartels may not emerge even though the industry has sought state intervention to augment private collective action this point is supported by research in other settings where private negotiations among heterogeneous parties to address common pool problems have failed the usual problem is disagreement over the distribution of costs and benefits and the parties often turn to the state for a solution yet as johnson and libecap 1982 have shown for fisheries and libecap and wiggins 19851 for oil field unitization the distributional problems encountered in private contracting spill over to the political arena causing delays and modifications of regulations in the case of fisheries regulatory authorities adopt policies that maintain status quo rankings of heterogeneous fishermen and expand the stock through fish hatcheries for instance and politically controversial quotas to reduce harvest typically are not introduced until the fishery is seriously depleted in the case of oil field unitization politicians also are unable to resolve conflicts over the definition of unit shares or quotas the same issue that blocks private agreement as a result government imposed unitization generally does not occur until late in the life of the field after many of the common pool losses have already been inflicted even then the unitization rules leave many margins for dissipation uncontrolled 4 this paper argues that the organization costs facing a heterogeneous industry and the political costs facing politicians in responding to its demands for regulation must be given more attention to explain the actual policies that emerge and to predict when agency capture and government sponsored cartel formation will be successful the argument is illustrated by examining the development of new deal agricultural regulation where initial cartel efforts were gradually modified in response to the political opposition of certain farm groups

the tragedy of the commons in cote d ivoire agriculture empirical evidence and implications for evaluating trade policies expansion of cultivated land diminishes the extent of forestlands or reduces the length of fallow periods and hence reduces the amount of natural vegetation the increase in land under cultivation has a direct output increasing effect at the cost of reducing natural capital and agricultural productivity the evidence for western cote d ivoire is consistent with and provides an explanation for the declining agricultural productivity observed in sub saharan africa during the past few decades this article uses a theoretical model to determine the level of land cultivation that maximizes village income using data from cote d ivoire for 1985 87 an important part of the land is under common property usually at the village level the results show that farmers do not internalize even a small fraction of the external cost of biomass in their land allocation decisions the lack of internalization of the social cost of the biomass resource leads to large income losses at the village level as much as 14 percent of village income these losses are many times larger than the usual estimates for conventional distortions

contractual responses to the common pool prorationing of crude oil production this paper examines bargaining among firms to mitigate rent dissipation following the major oil discoveries of 1926 35 because of high bargaining costs firms chose prorationing instead of consolidation and unitization and success varied the analysis also shows that prorationing took the form it did because concession such as per well quotas were required to draw in small operations and the quotas led to predictable responses regarding rent dissipation prorationing despite its costs controlled total field production and costs conserved natural reservoir energies and lengthened field life when private agreements failed the parties successfully appealed for state enforcement since similar heterogeneities influnce regulations elsewhere in the economy detailed analysis of bargaining among firms is essential for insight into the emergence of various institutional forms 33 references 3 tables

contestable markets under uncertainty in this article we present a model of a market which is ex post contestable we show that in a market characterized by uncertainty a firm will face a tradeoff between efficiency and flexibility and generally will make some precommitments to take advantage of ex ante technologies we show that in the face of potential entry the incumbent will increase his precommitments and in so doing will affect the probability of entry the degree of market contestability is therefore endogenously determined by the choice of precommitments the extent to which precommitments will be used to affect entry probabilities is shown to depend on the efficiency of ex ante production adjustment costs and the degree of uncertainty in particular we show that the market becomes more contestable as the relative efficiency of ex post production increases and as market conditions become more uncertain

common property institutions and sustainable governance of resources abstract the literature on common property based resource management comprises many important studies that seek to specify the conditions under which groups of users will self organize and sustainably govern resources upon which they depend using three of the more comprehensive such studies and with an extensive review of writings on the commons this paper demonstrates that the enterprise of generating lists of conditions under which commons are governed sustainably is a flawed and impossibly costly research task for a way out the paper examines the relative merits of statistical comparative and case study approaches to studying the commons it ends with a plea for careful research design and sample selection construction of causal mechanisms and a shift toward comparative and statistical rather than single case analyses such steps are necessary for a coherent empirically relevant theory of the commons

transboundary externalities in the environmental transition hypothesis the environmental kuznets curve ekc is a hypothesis which implies that it is possible to grow out of environmental degradation most theoretical models of the ekc relation have not accounted for transboundary and intergenerational externalities nor have empirical studies provided evidence that validates an inverted u shaped relation between environmental degradation and economic growth for pollution problems where the effects are far displaced or are long delayed

economic heterogeneity and the commons effects on collective action and collective goods provisioning summary the question of how economic and socio cultural heterogeneity impacts commons management has been receiving increasing attention but without resolution however the issue is increasingly important in a globalizing world this paper builds upon recent theoretical works to provide a clearer understanding of the conditions under which we might expect economic inequality to have positive or negative effects of critical importance to the argument is the distinction between the problem of collective action and the problem of providing collective goods a synthetic set of predictions is subsequently developed and tested with a comparative analysis of case studies of fisheries and irrigation systems

community enforcement of fisheries effort restrictions abstract this paper models the use of community sanctions to restrict effort in a simple gordon schaefer style model of the fishery with heterogeneous fishing costs the withdrawal of cooperation in other areas of life is used to both restrict effort and to sanction those who continue to cooperate with those who have not restricted effort coalition proof nash equilibria are generated by a combination of sanctions discouraging the defection of small groups and stock reductions discouraging noncooperation by large groups both entry restrictions and individual quotas can be supported by community sanctions under some parameter combinations however there are cases where each can generate lower total rents than would be available under open access relatively low cost fishers are more likely to support entry restrictions and ignore community attempts to restrict individual effort while high cost fishers are more likely to support quotas

implementation issues the political economy of efficient fishing responses to over fishing are very similar efforts begin with gear restrictions area closures and seasonal closures entry restrictions including a license moratorium and a license buyback program often follow the results are similar too over fishing and effort increases continue common property not open access regimes community development quotas cdqs private property regimes individual transferable quotas itqs and pigouvian taxes can produce the optimal amount at the minimum cost of course the details of each are critical political feasibility issues and local conditions are factored into the cdq itq tax decision and the resolution of the key details of each fisher heterogeneity and possible ways to reduce it are especially important issues since over fishing problems initial government responses and results are so common the policy formulation process and recommended outcome have potential global relevance 1999 elsevier science b v all rights reserved

property rights regimes and natural resources a conceptual analysis the term common property resource is an example of a term repeatedly used to refer to property owned by a government or by no one it is also used for property owned by a community of resource users such usage leads to confusion in scientific study and policy analysis in this paper we develop a conceptual schema for arraying property rights regimes that distinguishes among diverse bundles of rights ranging from authorized user to claimant to proprietor and to owner we apply this conceptual schema to analyze findings from a variety of empirical settings including the maine lobster industry

property rights and choice the case of the fishery formal property rights are typically established after considerable waste has occurred despite the effectiveness of such schemes in addressing the inefficiencies of common pool resources adoption can be contentious because of the assignment of wealth and political influence that accompany the transition to exclusive property rights this paper studies how the early involvement of harvesters in policy implementation designed to address the commons inefficiency may foster perceived legitimacy and lessen political opposition to the establishment of individual property rights we demonstrate that it is optimal for a manager facing industry strife and reform delay to allow firms to self select into the property rights regime the strategic interaction of harvesters leads to an equilibrium characterized by the global adoption of property rights thus by providing harvesters with a choice between management systems policy makers can reduce the transaction costs associated with the need to create political consensus while ensuring an outcome similar to the top down implementation of market based management evidence is provided from a recent policy change in maryland fisheries in which the provision of a choice resulted in the overwhelming adoption of individual transferable quotas and the end of the race to fish

export processing zones in madagascar a success story under threat summary the success of export processing zones or the zone franche in madagascar since 1990 is with the exception of mauritius an isolated and unknown case in africa this paper based on first hand data explains that the zone franche has had a highly significant macroeconomic impact in terms of exports and jobs we show that average wages in the zone franche are equivalent to the other formal activity sectors other things being equal and that labor standards there are higher than average the zone franche quickly recovered from the 2002 crisis and has benefited a great deal from agoa the final phase out of the multi fibre arrangement in 2005 is expected to have a negative impact on the zone franche

deprived land use intensification in shifting cultivation the population pressure hypothesis revisited this article provides a theoretical framework based on optimal control theory to analyze farm households land use intensification decisions in forest based shifting cultivation slash and burn agroecosystems the main results from the analysis generally coincide with the population pressure hypothesis pph as an important driver of soil degradation due to the so called fallow crisis or deprived land use intensification in shifting cultivation however the model also shows from a supply perspective that such a vicious circle of lower yields and greater forest land clearing may be avoided when the production elasticity of on farm labor outweighs the elasticity of substitution between farm labor and soil fertility furthermore using data from shifting cultivating households from yucatan mexico we calibrate the effect of changes in population density the numerical analysis suggests that by contrast to better off households when population density increases poorer shifting cultivating households optimal labor allocation strategy is to further extensify land use by clearing more forest in the village common property land or ejido land

advantage to a risk neutral firm of flexible resources under demand uncertainty this paper shows that flexible resources resources that can be resold or switched between productive processes are valuable to firms facing uncertain demand it is assumed that the firm must make its input purchase decision before the demand for its final product is known it is this differential in timing of the purchase of inputs versus selling of outputs which is the special problem confronted in this paper and which makes the existence of a flexible resource valuable to the firm stigler in a 1939 article recognized that in a risky environment there are advantages to resources which are flexible but did not provide an optimizing model in his analysis 4 others such as turnovsky 5 appelbaum and lim 1 sheppard 3 and epstein 2 have examined this timing problem and have recognized as we do that in a market characterized by uncertainty a firm will face a trade off between efficiency and flexibility 1 39 however the issue of the advantage of flexible resources under uncertainty has not been directly examined usually because the focus has been on outputs rather than inputs 1 or on attitudes toward risk even when input choice is responsive to uncertainty as in epstein 2 the inputs are not flexible in our sense because it is only the timing of input purchase which is flexible not the uses to which inputs can be assigned of the several ways uncertainty in demand can be conceptualized for the firm these papers have commonly considered a situation where it is the product price which is uncertain 2 5 in contrast this paper assumes that while price is known the quantity demanded is uncertain this allows us to consider a slightly different kind of firm from the previous work the firm is assumed to be a pure price taker it might be in an oligopolistic industry where total industry demand is known but the market share for each firm has yet to be revealed 2 or the firm might be in a regulated industry where prices are set and all market adjustments come on the quantity side

the dynamic efficiency costs of common pool resource exploitation we conduct the first empirical investigation of common pool resource users dynamic and strategic behavior at the micro level using real world data fishermen s strategies in a fully dynamic game account for latent resource dynamics and other players actions revealing the profit structure of the fishery we compare the fishermen s actual and socially optimal exploitation paths under a time specific vessel allocation policy and find a sizable dynamic externality individual fishermen respond to other users by exerting effort above the optimal level early in the season congestion is costly instantaneously but is beneficial in the long run because it partially offsets dynamic inefficiencies jel d24 q21 q22

property relations and economic development the other land reform abstract continued concern for development has led to the suggestion that private property rights should be created to stimulate economic development this suggestion derives from an incomplete understanding of the property relations on the public domain lands in the arid tropics and from a confusion of cause and effect between property and economic productivity a model of the private public boundary in land is developed that challenges the view that wealth would increase if land at the extensive margin were privatized the various types of property regimes in land are defined and explained

does inequality lead to greater efficiency in the use of local commons the role of strategic investments in capacity abstract this paper examines how inequality in access to credit affects the strategic behavior of users of a common resource in their investment and extraction decisions a dynamic two stage game is developed in which agents choose the level of sunk investment in capacity and the consequent extraction path the results show that agents invest in excess capacity except when inequality is very high the relation between inequality and efficiency in resource extraction is found to be non monotonic with the steady state resource stock being closest to the optimal level when either inequality is very high or very low

ejido reforms in mexico conceptual issues and potential outcomes the evolving privatization of the ejido system in mexico represents a challenge to standard economic models of common property regimes these models tend to emphasize human interrelations while discounting the ecological conditions which form the environment for human interactions a risk spreading safety first model capturing interrelationships between nature and humans is developed to analyze the potential implications of mexico s privatization efforts recognizing that the majority of ejido lands are communal not parcelized located primarily in arid areas the model supports the prediction that privatization will occur and be most successful on irrigated ejido lands with modern social and economic infrastructure