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Inequality and Conservation on the Local Commons: A Theoretical Exercise

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  • Dayton-Johnson, Jeff
  • Bardhan, Pranab

Abstract

To analyze the effect of asset inequality on cooperation within a group, we consider a two-player noncooperative model of conservation of a common-pool resource (CPR): a fishery. We give necessary and sufficient conditions such that conservation is a Nash equilibrium, and we show that increasing inequality does not, in general, favor full conservation. However, once inequality is sufficiently great, further inequality may push the players closer to efficiency. Thus the relationship between inequality and economic efficiency is U-shaped. We analyze the implications for conservation if players have earning opportunities outside the commons. Finally, we consider various schemes of community regulation of the commons in the light of the noncooperative model with or without exit options. We find that increases in inequality may restrict the range of implementable mechanisms.

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Bibliographic Info

Paper provided by Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley in its series Center for International and Development Economics Research, Working Paper Series with number qt7f9913w9.

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Date of creation: 09 Jun 1996
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Handle: RePEc:cdl:ciders:qt7f9913w9

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Keywords: collective action; common property; exit options; inequality; international economics;

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References

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  1. Pranab Bardhan, 1993. "Symposium on Management of Local Commons," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 87-92, Fall.
  2. Bliss, Christopher & Nalebuff, Barry, 1984. "Dragon-slaying and ballroom dancing: The private supply of a public good," Journal of Public Economics, Elsevier, vol. 25(1-2), pages 1-12, November.
  3. Baland, J-M & Platteau, J-P, 1997. "Wealth Inequality and Efficiency in the Commons," Papers 193, Notre-Dame de la Paix, Sciences Economiques et Sociales.
  4. Bardhan, Pranab & Ghatak, Maitreesh, 1999. "Inequality, Market Imperfections, and Collective Action Problems," Center for International and Development Economics Research, Working Paper Series qt6hg27862, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  5. Benhabib, Jess & Rustichini, Aldo, 1996. " Social Conflict and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 125-42, March.
  6. Johnson, Ronald N & Libecap, Gary D, 1982. "Contracting Problems and Regulation: The Case of the Fishery," American Economic Review, American Economic Association, vol. 72(5), pages 1005-22, December.
  7. David Feeny & Susan Hanna & Arthur F. McEvoy, 1996. "Questioning the Assumptions of the "Tragedy of the Commons" Model of Fisheries," Land Economics, University of Wisconsin Press, vol. 72(2), pages 187-205.
  8. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
  9. Shanmugaratnam, N. & Vedeld, T. & Mossige, A. & Bovin, M., 1992. "Resource Management and Pastoral Institution Building in West African Sahel," World Bank - Discussion Papers 175, World Bank.
  10. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
  11. Chan, Kenneth S. & Mestelman, Stuart & Muller, R. Andrew, 2008. "Voluntary Provision of Public Goods," Handbook of Experimental Economics Results, Elsevier.
  12. Sethi, Rajiv & Somanathan, E, 1996. "The Evolution of Social Norms in Common Property Resource Use," American Economic Review, American Economic Association, vol. 86(4), pages 766-88, September.
  13. Itaya, Jun-ichi & de Meza, David & Myles, Gareth D., 1997. "In praise of inequality: public good provision and income distribution," Economics Letters, Elsevier, vol. 57(3), pages 289-296, December.
  14. Bardhan, Pranab, 2000. "Irrigation and Cooperation: An Empirical Analysis of 48 Irrigation Communities in South India," Economic Development and Cultural Change, University of Chicago Press, vol. 48(4), pages 847-65, July.
  15. Pranab Bardhan., 1993. "Rational Fools and Cooperation in a Poor Hydraulic Economy," Center for International and Development Economics Research (CIDER) Working Papers C93-015, University of California at Berkeley.
  16. Baland, Jean-Marie & Platteau, Jean-Philippe, 2000. "Halting Degradation of Natural Resources: Is There a Role for Rural Communities?," OUP Catalogue, Oxford University Press, number 9780198290612.
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