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

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

escaping the green prison entrepreneurship and the creation of opportunities for sustainable development abstract while entrepreneurial activity has been an important force for social and ecological sustainability its efficacy is dependent upon the nature of market incentives this limitation is sometimes explained by the metaphor of the prisoner s dilemma which we term the green prison in this prison entrepreneurs are compelled to environmentally degrading behavior due to the divergence between individual rewards and collective goals for sustainable development entrepreneurs however can escape from the green prison by altering or creating the institutions norms property rights and legislation that establish the incentives of competitive games we provide a variety of evidence of such entrepreneurial action and discuss its implications for theory and practice

the new frontier of american fisheries governance abstract throughout its history america has viewed its oceans as vast fishery frontiers these frontiers are suffering depletion as large amounts of fishing power combined with significant oceanographic changes are straining the limits of sustainability the new ocean frontier is not the promise of undeveloped resources but rather the challenge of undeveloped sustainable governance systems this paper discusses the institutional transformation necessary to achieve sustainable governance the first part provides an historical overview of the american use of resources as frontiers the second part characterizes the frontier as an extreme form of resource use contrasting it to its opposite ideal the commons the third part outlines behavioral differences between the users of frontiers and commons the pioneers and shareholders building on the attributes of resource management under the two ideals the fourth part of the discussion focuses on the necessary conditions and major challenges to developing the institutional capital required for sustainable us fishery management the institutional capital needed for sustainable fisheries governance is comprised of several pieces 1 a perception of the fishery as an integrated ecosystem 2 an identification of shareholders 3 an allocation of decision making power and responsibility which vests all interests and internalizes the source of control 4 incentive structures to promote long term management 5 management skills among fishery interests 6 management processes that promote adaptability to change the final section provides conclusions and an assessment of the progress us fishery management has made in institutional capital development pressures of scarcity are forcing us fisheries management to evolve away from the frontier ideal but the development of the institutional capital necessary for sustainable fishery governance is incomplete

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

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

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

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

competitive lobbying over common pool resource regulations abstract common pool resource regulations are developed through a combination of resource assessment economic analysis and politics we investigate a management institution wherein users can influence a proposed common extraction cap through costly effort or lobbying our model incorporates two user types a few harvesters who efficiently handle extraction externalities and a larger number who do not without regulation we observe the efficient harvesters extracting more than the social optimum consistent with nash equilibrium given the opportunity to lobby we observe harvesters contributing to move inefficient proposed caps toward more efficient levels however lobbying is a public good and consistent with nash equilibrium the user type with weaker preference free rides on the type with stronger preferences leading to insufficient lobbying and inefficient regulations especially when the cap must be lowered this highlights an important limitation to participatory governance mechanisms when participation is costly

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

enforcement for sale lobbying for water in pakistan s indus basin abstract surface irrigation is a common pool resource subject to over exploitation by upstream users we ask to what extent state enforcement of de jure water allocations designed to ensure adequate irrigation to downstream users is up for sale unique data on the land ownership of nearly a quarter million irrigators in pakistan s vast indus basin watershed provide a measure of political influence consistent with an influence driven model the decline in water availability and land values from head to tail is accentuated along channels having greater lobbying power at the head and attenuated along channels having greater lobbying power at the tail our paper shows how power disparities can be leveraged through the administrative state to capture valuable common resources

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

determinants of the implied shadow exchange rates from a target zone abstract the paper provides a continuous time model of the dynamic behavior of exchange rates and interest rates when exchange rates are managed within a target zone with the possibility of realignments in the case of a realignment the exchange rate jumps to a shadow exchange rate the timing of realignments is modelled by a cox process with an intensity that depends on the location of the exchange rate in the target zone band as well as the distance to the shadow exchange rate we set up an approximate maximum likelihood estimation approach and provide parameter estimates for six erm target zones moreover in the empirical analysis we filter out the shadow exchange rates and investigate which fundamental macroeconomic factors are able to explain the short run and long run behavior of the filtered shadow exchange rates

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

arbitrage based tests of target zone credibility evidence from erm cross rate options this paper introduces two arbitrage based tests of target zone credibility using a new data source exchange rate mechanism cross rate options using daily option prices from september 1991 to august 1994 the authors assess the credibility of the pound mark and mark lira target zones that collapsed in september 1992 and the ongoing mark french franc target zone these tests are based on restrictions that must apply to all option prices within a credible target zone and are free from specification error and estimation error the authors also identify a minimum intensity of realignment an expression indicating the probability weighted average realignment size copyright 1996 by american economic association

generating enhanced fishery rents by internalizing product quality characteristics this paper demonstrates howadditional rents are generated in a fisherycharacterized by intraseasonal variation infish characteristics including size condition and composition based on anexpanded conceptual model of the optimalharvest rule fish characteristics affect preand post harvest production yields and outputprices a dynamic empirical model which uses asystem of quality characteristics and anhedonic equation illustrates the complexrelationships and management choices associatedwith internalizing seafood qualitycharacteristics in a hake fishery the modelretains the regulated open access managementsystem but controls intertemporal andintersectoral quotas production portfolios and total allowable catch results demonstratethat including revenue side effects frominternalizing fish quality can generatesignificantly greater rents and reduce therelative benefits of increased productionyields if excluded bioeconomic models canunderestimate the level of regulatory rentdissipation and overemphasize managementobjectives such as full utilization whichcould misdirect processing decisions and resultin a suboptimal resource management plan implications for data collection multidisciplinary analysis and improvements inmarine resource management are discussed

on the efficiency effects of private dis trust in the government abstract we consider a version of the seminal kydland prescott model where in each period some private agents believe the policy announcements made by the government the other agents follow a standard optimizing strategy the fraction of agents who believe the government changes over time according to a word of mouth learning process we show that the initial number of believers and the speed of learning can have drastic consequences for the policy followed and the losses experienced by the different agents in particular the utility of the private sector may jump upwards if the initial number of believers exceeds a given threshold

announcements inflation targeting and central bank incentives this paper studies the incentives a central bank faces in announcing inflation targets when the central bank has private information about the economy and the public is uncertain about the central bank s preferences targeting rules in the absence of announcements reduce the inflationary bias of discretionary policy but they distort the central bank s response to private information about the economy this distortion is eliminated when the central bank is allowed to announce the inflation target announcements also affect credibility although the way they do so depends on the exact definition of credibility that is employed in standard models of monetary policy in which dynamic inconsistency plays a prominent role announcements from the central bank about its policy inten tions are not believable the central bank has an incentive to lie yet central banks often do make announcements and they are legally required to do so in some cases the bank of england for example must issue periodic inflation reports the chairman of the federal reserve is required by the humphrey hawkins act to testify before congress twice each year to explain the fed s policy actions and to detail the fed s outlook for future economic develop ments similarly the reserve bank of new zealand is required under the reserve bank act of 1989 to publish policy statements that spell out its plans the january 1994 legislation governing the banque de france requires its gov ernor to appear before parliament and the european central bank must under the maastricht treaty report at least annually to the european parlia ment if public statements about policy intentions are not credible the question naturally arises as to why central banks are frequently required to make them the answer of course is that announcements do provide the public with some information given the growing interest in policy transparency particu larly among those central banks that have adopted some form of inflation targeting it is perhaps surprising that there has been relatively little explicit analysis of how inflation targeting requirements might combine with reporting requirements to influence the informational content of announcements the conduct of stabilization policies and the central bank s credibility the purpose of this paper is to analyse the way inflation targeting affects the incentives the central bank faces in announcing targets when the central bank has private information about the economy and the public is uncertain about the central bank s preferences inflation targeting has seen increased popularity in recent years but a fixed target for inflation is generally suboptimal in the face of supply shocks while state contingent targets are viewed as not feasible an important result of this paper is that allowing the central bank to announce its own inflation target

convergence in the finite cournot oligopoly with social and individual learning abstract convergence to the nash equilibrium in a cournot oligopoly is a question that recurrently arises as a subject of controversy in economics the development of evolutionary game theory has provided an equilibrium concept more directly connected with adjustment dynamics and the evolutionary stability of the equilibria of the cournot game have been extensively studied in the literature several articles show that the walrasian equilibrium is the stable ess of the cournot game but no general result has been established for the difficult case of simultaneous heterogenous mutations authors propose specific selection dynamics to analyze this case vriend 2000 proposes using a genetic algorithm for studying learning dynamics in this game and obtains convergence to cournot equilibrium with individual learning the resulting convergence has been questioned by arifovic and maschek 2006 the aim of this article is to clarify this controversy it analyzes the mechanisms that are behind these contradictory results and underlines the specific role of the spite effect we show why social learning gives rise to the walrasian equilibrium and why in a general setup individual learning can effectively yield convergence to the cournot equilibrium we also illustrate these general results by systematic computational experiments

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

wealth based trust and the development of collective action interpersonal trust is one possible mechanism by which wealth inequality affects the success of efforts in cooperation specifically the presence of perceived economic differences between members of small agricultural cooperatives in northwest ecuador s agricultural frontier encourages trust in the wealthy thus facilitating co op development during the initial stage of cooperative formation but such inequality and exclusive trust may later negatively affect co op success these generalizations are only possible through refinement of frameworks currently used in the study of heterogeneity and common pool resource management this refinement is made possible by paying closer attention to the operationalization of variables and by synthesizing already existing hypotheses

rent seeking in natural resource quota allocations this paper examines the incentives for rent seeking in the allocation of natural resource quotas to competing user groups by political bodies the political body has discretion in making the allocation and competing user groups rent seek to influence the allocation we investigate ways in which the governmental body can affect the behavior of the players by setting the ground rules for the competition a political body can affect an allocatively pareto efficient outcome by choosing an appropriate default pre rent seeking policy surprisingly an allocatively efficient default policy is unlikely to minimize social costs however winner take all default policies are likely to maximize not minimize rent seeking a competitive post allocation market reduces rent seeking but is not either itself or in combination with an efficient default policy capable of minimizing social costs however forcing winners in political redistributions to fully compensate losers both lowers the rent seeking levels relative to a potential compensation criterion and when used together with an efficient default policy is capable of obtaining the first best solution of an allocatively efficient allocation with zero rent seeking

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

learning the ramsey outcome in a kydland prescott economy abstract we study if adaptive learning by a central bank cb in the kydland and prescott environment can steer the economy to the pareto optimal outcome our cb evaluates its potential strategies regarding the announced and the actual inflation rate through expectations of the performance of these strategies formed thanks to its mental model of the economy this model is forward looking and adaptive at the same time as a starting point we follow arifovic et al 2010 and initially assume that there are two types of agents believers who set their inflation forecast equal to the announced inflation and non believers who form static optimal forecast coupled with a forecast error correction mechanism our results show that the economy can reach near ramsey outcomes most of the time in the absence of believers the economies almost always converge to the ramsey outcome in their experiments with human subjects arifovic and sargent 2003 showed that experimental economies reach and stay close to the ramsey outcome most of the time giving support to the just do it policy recommendation in light of the experimental findings our model is of particular interest as it is the only agent based or adaptive learning model that consistently selects the ramsey outcome in this context

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

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

reputation and time consistency recent work has shown that reputational arguments based on trigger strategies can sometimes be used to deal with the problem of time inconsistency in government policy this idea was exploited by robert barro and david gordon 1983 in a model of inflation and by v v chari and patrick kehoe 1988 in a model of capital taxation here it is shown that reputational arguments of this sort are widely applicable 2 a general policy model is developed based on an economy that is stationary over time contains identical households and has no endogenous state variables it is shown in general that the infinite horizon version of this model has equilibria in trigger strategies that yield outcomes strictly better than those attainable as equilibria in the one period model

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

optimal harvesting of stochastic spatial resources abstract we characterize the optimal harvest of a renewable resource in a generalized stochastic spatially explicit model despite the complexity of the model we are able to obtain sharp analytical results we find that the optimal harvest rule in general depends upon dispersal patterns of the resource across space and only in special circumstances do we find a modified golden rule of growth that is independent of dispersal patterns we also find that the optimal harvest rule may include closure of some areas to harvest either on a temporary or permanent basis biological reserves reserves alone cannot correct open access but may under sufficient spatial heterogeneity and connectivity increase profits if appropriate harvest controls are in place outside of reserves

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

confidence building on euro convergence evidence from currency options we study the evolution of investor confidence in 1992 1998 over the chance of individual currencies to converge to the euro using data on currency option prices convergence risk which may reflect uncertainty over policy commitment as well as exogenous fundamentals induces a level of implied volatility in excess of actual volatility this volatility wedge should gradually decrease as confidence grows over time as convergence policy is maintained and the risk of a reversal is progressively resolved empirically we indeed find a positive volatility wedge which declines over time only for currencies involved in the euro convergence process the wedge and other convergence risk measures are correlated with both exogenous fundamentals and proxies for policy commitment uncertainty we also find that the wedge responds to policy shocks in an asymmetric fashion suggesting that policy risk is resolved at different rates after negative and positive shocks finally we estimate a regime switching model of convergence uncertainty using data on interest rates currency rates and currency option prices the results confirm the time varying and asymmetric nature of convergence risk and indicate that investors demand a risk premium for convergence risk

erm realignment risk and its economic determinants as reflected in cross rate options this paper uses data on over the counter options between the mark and the pound lira french franc and peseta to investigate the credibility of exchange rate target zones within the erm we compare empirical implications for the relation between option prices and the spot s position within the band for three classes of target zone models those with full credibility those with exogenous realignment risk and those with endogenous realignment risk empirically implied volatility from these options attains a maximum near the edges of an exchange rate band rather than its centre even three to six months prior to realignment

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

escaping nash inflation an ordinary differential equation ode gives the mean dynamics that govern the convergence to self confirming equilibria of self referential systems under discounted least squares learning another ode governs escape dynamics that recurrently propel away from a self confirming equilibrium in a model with a unique self confirming equilibrium the escape dynamics make the government discover too strong a version of the natural rate hypothesis the escape route dynamics cause recurrent outcomes close to the ramsey commitment inflation rate in a model with an adaptive government

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

contracting problems and the adoption of regulatory cartels since 1966 a usd a marketing order has governed the sales volume of domestic hop growers despite offering cartel like advantages a hop marketing order proposal was defeated in a 1965 referendum of growers using individual grower votes from this referendum this paper identifies the sources of opposition to the 1965 marketing order the analysis proceeds to examine the types of recontracting that transpired enabling the adoption of a revised proposal in 1966

an options based analysis of emerging market exchange rate expectations brazil s real plan 1994 1999 abstract this paper uses currency option data to investigate market expectations on the brazilian real u s dollar exchange rate from october 1994 through march 1999 we derive implied probability density functions pdf for expected future exchange rates and thus measures of the credibility of the crawling peg and target zone regimes governing the exchange rate target zone credibility was poor prior to february 1996 improved afterwards through september 1997 and later started to worsen again the market anticipated periodic band adjustments and estimated distributions are very sensitive to political and economic news affecting the credibility of the regime

social heterogeneity and wasteful lobbying using a general equilibrium model with endogenous policy we explore how heterogeneity affects wasteful lobbying by sectoral interest groups with the help of a simulation approach we first investigate the impact of information heterogeneity on how lobbies react to a shift from a soft to a strict government budget constraint next we examine how lobbying is influenced by heterogenous perception of the general equilibrium implications of lobbying effort finally we explore the consequences of heterogenous specialization in households asset portfolios we conclude that social heterogeneity in information perceptions and portfolio compositions increases incentives to lobby

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

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

heterogeneity and collective management evidence from common forests in himachal pradesh india summary this paper conducts a statistical investigation into the impact of differences in economic benefits wealth and social classes within the community on collective management of forests there are two key results first social parochialism is not a pre requisite for collective management of forests moderate levels of social diversity are associated with low collective management but at high levels of social diversity collective management is high second moderate wealth heterogeneity is beneficial however at high levels and in the presence of benefit heterogeneity it decreases collective management similarly benefit heterogeneity reduces collective management if wealth heterogeneity also exists these results run counter to the dominant understanding of heterogeneity but may be seen as alternate explanations under a specific socioeconomic context

addressing global environmental externalities transaction costs considerations is there a way to understand why some global environmental externalities are addressed effectively whereas others are not the transaction costs of defining the property rights to mitigation benefits and costs is a useful framework for such analysis this approach views international cooperation as a contractual process among country leaders to assign those property rights leaders cooperate when it serves domestic interests to do so the demand for property rights comes from those who value and stand to gain from multilateral action property rights are supplied by international agreements that specify resource access and use assign costs and benefits including outlining the size and duration of compensating transfer payments and determining who will pay and who will receive them four factors raise the transaction costs of assigning property rights i scientific uncertainty regarding mitigation benefits and costs ii varying preferences and perceptions across heterogeneous populations iii asymmetric information and iv the extent of compliance and new entry these factors are used to examine the role of transaction costs in the establishment and allocation of property rights to provide globally valued national parks implement the convention on the international trade in endangered species of wild fauna and flora execute the montreal protocol to manage emissions that damage the stratospheric ozone layer set limits on harvest of highly migratory ocean fish stocks and control greenhouse gas emissions jel d23 p14 q22 q51 q54 q58

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

cheap talk and the fed a theory of imprecise policy announcments this paper examines the problem faced by the federal reserve in announcing its private information about its future policies because it would like to manipulate expectations and pursue a time inconsistent policy the fed cannot reveal its policy objectives precisely and credibly it can however communicate some information about its goals through the cheap talk mechanism of vincent crawford and joel sobel making announcements that are imprecise and only giving ranges within which these goals may lie copyright 1989 by american economic association

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

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

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

incomplete ownership rent dissipation and the return to related investments i introduction when ownership rights to a resource are costless to enforce trades occur and an equilibrium price emerges in such cases it is a price and a transfer of wealth from one agent to another that rations use of the resource absent ownership no price is charged and use is rationed by a transaction cost acquiring a barrel of oil or an acre foot of water from a shared reservoir is a transaction a resource in the common domain is transformed into property by the act of lifting it to the surface where ownership can be enforced the relevant transaction cost in this case is the cost of pumping in a fishery the relevant transaction cost is the cost of locating and capturing a portion of the unowned stock the marginal transaction cost limits each individual s use and accomplishes the necessary task of equating demand to the resource s supply users of the resource are in equilibrium when this marginal transaction cost equals the resource s marginal value the transaction cost also eliminates all or part of the rent the resource would earn if owned however and the size of this loss depends on the relationship between average transaction cost and the resource s marginal value this suggests that the amount of rent an unowned resource will yield in equilibrium after netting out relevant costs depends on the shape of the cost function for acquiring it if marginal cost is much greater than average cost as in cases where marginal cost is steeply rising the equilibrium rent will be relatively large 1 while the shape of the cost function depends on the nature of the resource it is not immutable for example it can be altered by imposing constraints on the inputs or the technology used it follows that users of a resource would benefit collectively if the technology or inputs used were constrained in a way that causes the marginal cost of obtaining it to rise steeply the optimal choice of such constraints is a well formulated second best policy problem this specification of the problem is incomplete however because the intensity of competition for the shared resource can also be changed by actions that affect it only indirectly an innovation or investment that lowers the individual s cost of acquiring it for example by reducing the price of an input used has this effect so does an action that raises the resource s marginal value product possibly by affecting the price or availability of a substitute such actions increase competition for the shared resource and raise the equilibrium cost of actions taken to acquire it in this sense the rent dissipation that is normally thought to characterize competition for shared resources can spread to related actions or investments both of these considerations are pursued in what follows second best policy toward a shared resource is examined by considering regulations that can control some but not all of the inputs needed to acquire it it is shown that the optimal input constraint and the fraction of potential rent such a policy can capture depend on two determinants the elasticity of substitution between and relative price of regulated and unregulated inputs it is also shown that competition for the shared resource can eliminate all or part of the return to related actions i e actions that result in a shift in the relevant private cost or benefit function the size of such losses depends in a simple way on the elasticities of relevant cost and benefit functions these additional losses can occur even in cases where direct competition causes complete rent dissipation as a result the loss that results from free access can exceed the rent the resource would earn in a complete markets equilibrium this phenomenon termed excess dissipation is illustrated with a number of examples investments that reduce the percolation of groundwater back into a common aquifer or expenditures to prevent fish from escaping from a net and returning to the natural population during the process of capture are shown to have this effect

pools and streams a stochastic process model of applied research abstract applied research is often viewed as a process of testing ideas drawn from a pool of candidate innovations this model is formalized for the case in which the pool of ideas is continually replenished through basic research the intensity of applied research is determined by the equilibrium of an n person non cooperative game where players choose dynamic strategies for exploiting the pool the presence of a pool cannot be detected in a stationary state but when the number of applied researchers is finite transient responses to exogenous shifts in basic research policy may reveal the pool s existence

contagious cooperation temptation and ecosystem collapse real world observations suggest that social norms o f cooperation can be effective in overcoming social dilemmas such as the joint management of a c ommon pool resource but also that they can be subject to slow erosion and sudden collapse we show that these patterns of erosion and 15 collapse emerge endogenously in a model of a closed community harvesting a renewable natural resource in which individual agents face the tempta tion to overexploit the resource while a cooperative harvesting norm spreads through the community via interpersonal relations we analyze under what circumstances small changes in key parameters including the size of the community and the rate of technological progress trigger catastrophic transitions from 20 relatively high levels of cooperation to widespread norm violation causing the social ecological system to collapse

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

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

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

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

an institutional theory of hydraulic fracturing policy the use of high volume horizontal hydraulic fracturing fracking has increased substantially over the past five years in the united states use of this drilling technology to extract natural gas from hitherto impermeable shale is expected to increase even more in coming decades two institutions integration contracts and well spacing requirements evolved to mitigate the common pool economic wastes associated with conventional oil and gas drilling u s regulators have applied these institutions to fracking however shale plays differ geologically from conventional plays and are subject to different extractive technologies we theorize that the point source pollution characteristics of conventional drilling allowed integration contracts and well space requirements to minimize local negative environmental externalities as an unintended byproduct of minimizing common pool economic wastes the non point source pollution characteristics of fracking however make these institutions insufficient to minimize negative environmental externalities associated with drilling in shale plays because the economic waste problem is different if policymakers understand the crucial differences between conventional oil and gas plays and shale plays and the drilling technologies applied to them they should be better equipped to craft fracking regulatory policies that internalize problematic externalities

choosing rules to govern the commons a model with evidence from mexico abstract i develop a model to assess distributive rules observed in field data on 48 mexican farmer managed irrigation systems households decide whether to contribute maintenance effort the aggregate amount of which affects the level of output distributive rules with congruence between the sharing of collective costs and benefits elicit the highest level of effort empirically however incongruent rules dominate the surveyed systems i argue that transaction costs offset some efficiency benefits of congruent rules i estimate a model of rule choice inequality and the age of the water users association strongly increase the likelihood that a system chooses proportional water allocation

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

learning benevolent leadership in a heterogenous agents economy abstract this paper studies the potential commitment value of cheap talk announcements in an agent based dynamic extension of the kydland prescott model in every period the policy maker makes a non binding inflation announcement before setting the actual inflation rate it updates its decisions using individual evolutionary learning the private agents can choose between two different forecasting strategies they can either set their forecast equal to the announcement or use an adaptive learning scheme to potentially forecast the true inflation they switch between these two strategies as a function of information about the associated payoffs they obtain through word of mouth choosing always the currently most favorable one while all agents using the first strategy make the same forecast those using the second strategy may generate different individual forecasts in spite of the complexity of the environment the boundedly rational policy maker learns to sustain a situation with a positive but fluctuating fraction of believers this outcome is pareto superior to the outcome predicted by standard theory interestingly enough the actions taken by the policy maker undergo marked qualitative changes as a function of the prevailing heterogeneity among and learning characteristics of the private agents

the effects of itq management on fishermen s welfare when the processing sector is imperfectly competitive in this paper we use a general model of imperfect competition to predict welfare changes within an open access fishery after it transitions to individual transferable quota itq management although related research has explored the effects of market power in the harvesting sector on itq performance none has considered the implications of an imperfectly competitive processing sector addressing this question we find that although fishermen should expect to gain from itqs under perfect competition they may suffer welfare losses if the processing sector is imperfectly competitive

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

target zones for exchange rates and policy changes abstract we extend a target zone model to allow for occasional changes in the stochastic process driving fundamentals a key implication is that seeming speculative attacks may be triggered by market perceptions that macroeconomic policy has switched say from tight to loose this fundamental based explanation for large exchange rate changes accompanied by no discernible contemporaneous change in the fundamental is an alternative to theories based on self fulfilling expectations without relying on intra marginal intervention this model is better able to reproduce empirical exchange rate distributions with more mass at the center and less at the edges of the band

sushi or fish fingers seafood diversity collapsing fish stocks and multispecies fishery management we present a model of a multispecies fishery and we show the following i consumer preferences for seafood diversity can trigger a sequential collapse of fish stocks under open access fishery ii the stronger the preferences are for diversity the higher is the need for coordinated multispecies regulation iii second best optimal management of only one or a few species is less strict than socially optimal management of the same species iv myopic regulation of one species ignoring spillovers to other species can cause depletion of other stocks that would not be depleted under open access

determinants of collective action on the local commons a model with evidence from mexico i develop a model of cooperation in small irrigation systems i give conditions under which an equalizing redistribution of wealth increases the level of equilibrium cooperation but also show that some redistributions that increase inequality can also increase cooperation the distributive rule a combination of arrangements for maintenance cost sharing and water allocation also affects the cooperation level i estimate statistical models of cooperation for three maintenance indicators using field data from a study of mexican irrigation societies social heterogeneity and landholding inequality are significantly associated with lower maintenance distributive rules that allocate water proportionally to landholding size likewise reduce maintenance

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

the economical management of multispecies fisheries resource based theory implicitly assumes that property rights to resources are secure extant property rights theory enables us to relax this assumption to take into account processes where there are struggles in establishing property rights that enhance

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

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

the effects on welfare of the imposition of individual transferable quotas on a heterogeneous fishing fleet abstract this paper examines the determination of effort levels the rental price of quotas and the number of participants in a fishery managed with a total allowable catch and individual transferable quotas how these variables change is determined for three phases of the management process potential participants in the fishery are assumed to be heterogeneous in their catching capabilities so that almost all active fishers earn positive net profits from fishing activities it is shown that these quasirents are reduced during any of the management phases considered here the impact of free allocations of permanent quota rights on fishers welfare is also considered this may increase the welfare of all fishers if the allocation is based on catch history however an example is provided where the welfare of some highliners is reduced when the allocation is based on effort history

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

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

mitigating the tragedy of the commons through cooperation an experimental evaluation abstract in a commons each firm s costs rise with industry output this externality can be mitigated if firms jointly restrict harvests but higher prices result repeated interaction usually facilitates cooperation that lowers harvest rates increased cooperation suggests there should be more firms in the socially optimal market structure using experimental markets with two to five firms we observe the influence of industry size on harvest rates cooperation increases the socially optimal number of firms in markets when there are static externalities but not for dynamic externalities finally even when the initial stock is low there is little tendency toward resource extinction

towards sustainability the fishery experience abstract the fishery with its inherent complexity and its long history of debate over matters of sustainability provides an important case study on sustainable development and the routes to its achievement this paper a reviews the evolution of sustainability concepts and management paradigms in the fishery b draws on this experience to develop an integrated sustainability assessment framework involving the evaluation of ecological socioeconomic community and institutional sustainability and c analyses potential policy directions for sustainable development the latter include use of adaptive management measures to live with uncertainty development of integrated strategies to cope with resource system complexity enhancement of local control and decision making establishment of appropriate property rights systems and the combination of comprehensive planning with economic diversification

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