The tragedy of the commons in a fishery when relative performance matters
AbstractThis paper presents a simple model of a common access fishery where fishermen care about relative performance as well as absolute profits. Our model captures the idea that status (which depends on relative performance) in a community influences a person's well-being. In our main specification, relative performance depends on the absolute difference in after-tax profits. We show that overharvesting resulting from the tragedy of the commons problem is exacerbated by the desire for higher relative performance, leading to a smaller steady-state fish stock and smaller steady-state profit for all the fishermen. We also consider alternative specifications where status depends on the absolute difference in harvests or relative difference in profits, or where there is heterogeneity in the degree to which status matters, or allowing for the possibility of extinction. In all these specifications, status further reduces the steady-state fish stock. We examine taxes and an individual quota as policy alternatives and find support for using the direct quantity method to implement the socially efficient stock level.
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Bibliographic InfoArticle provided by Elsevier in its journal Ecological Economics.
Volume (Year): 81 (2012)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/ecolecon
Relative profits; Relative performance; Status; Fishery; Tragedy of the commons;
Other versions of this item:
- Ngo Van Long & Stephanie F. McWhinnie, 2010. "The Tragedy of the Commons in a Fishery when Relative Performance Matters," School of Economics Working Papers 2010-07, University of Adelaide, School of Economics.
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
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