Non-Parametric Tests of the Tragedy of the Commons

43 Pages Posted: 30 Oct 2019

See all articles by H. Spencer Banzhaf

H. Spencer Banzhaf

Georgia State University - Department of Economics; PERC - Property and Environment Research Center; National Bureau of Economic Research (NBER)

Yaqin Liu

Duke University - Nicholas School of the Environment

Martin D. Smith

Duke University - Nicholas School of the Environment

Frank Asche

Stavanger University College

Date Written: October 2019

Abstract

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

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Suggested Citation

Banzhaf, H. Spencer and Liu, Yaqin and Smith, Martin D. and Asche, Frank, Non-Parametric Tests of the Tragedy of the Commons (October 2019). NBER Working Paper No. w26398. Available at SSRN: https://ssrn.com/abstract=3476478

H. Spencer Banzhaf (Contact Author)

Georgia State University - Department of Economics ( email )

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HOME PAGE: http://www2.gsu.edu/~prchsb/

PERC - Property and Environment Research Center

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Yaqin Liu

Duke University - Nicholas School of the Environment ( email )

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United States

Martin D. Smith

Duke University - Nicholas School of the Environment ( email )

Box 90328
A122 LSRC
Durham, NC 27708-0328
United States
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919-684-8741 (Fax)

HOME PAGE: http://fds.duke.edu/db/Nicholas/esp/faculty/marsmith

Frank Asche

Stavanger University College ( email )

PO Box 2557
Ullandhaug
4004 Stavanger
Norway

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