Team Inspection in the Management of Common-Pool Resources When Corruption is Present

Corrupt enforcement of harvesting restrictions hampers the management of common-pool resources in many developing countries, contributing in particular to widespread illegal fishing and logging. In this paper, we examine a simple intervention that may mitigate the effects of such corruption if, as is often the case due to congestion, stock, or pecuniary externalities, harvesters’ effort levels are strategic substitutes (i.e., greater effort by one harvester reduces the payoff to effort by other harvesters). We show that in this case, rather than sending out inspectors individually to each inspect a small subset of harvesters, sending them out as teams, whereby each team inspects a larger subset of harvesters, may be welfare enhancing. More specifically, we show that inspectors working in teams internalize more of the negative effort externalities between harvesters, and as a result choose to inspect more intensively, which ultimately reduces excessive harvest levels. Numerical simulations calibrated to data on fisheries indicate that the resulting welfare improvement can be significant.