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Output Sharing Among Groups Exploiting Common Pool Resources

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Author Info

  • Stephen Schott
  • Neil Buckley
  • Stuart Mestelman
  • R. Andrew Muller

Abstract

This paper provides an experimental testing ground for an equal output-sharing partnership approach as a common pool resource (CPR) management instrument. It examines the behaviour of resource users in output-sharing partnerships of different sizes, and evaluates the impact of partnership size and the way partners are assigned on effort (extraction) levels. Experimental results are very close to Nash predictions, and confirm that group size significantly affects resource user’s effort supply. The first best solution is achieved, when resource users are privately extracting from the CPR and equally sharing their output with the socially optimal number of partners. The way partners are allocated (randomly or with the same partners over 15 periods) does not significantly affect aggregate effort contributions. Income distribution, however, is more equitable with random allocation of partners than with fixed partners.

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Bibliographic Info

Paper provided by McMaster University in its series Department of Economics Working Papers with number 2002-06.

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Length: 39 pages
Date of creation: Jun 2002
Date of revision:
Handle: RePEc:mcm:deptwp:2002-06

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References

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  1. Chan, Kenneth S. & Mestelman, Stuart & Muller, R. Andrew, 2008. "Voluntary Provision of Public Goods," Handbook of Experimental Economics Results, Elsevier.
  2. Isaac, R Mark & Walker, James M, 1988. "Communication and Free-Riding Behavior: The Voluntary Contribution Mechanism," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 585-608, October.
  3. Stuart Mestelman, 2004. "Partners and strangers in non-linear public goods environments," McMaster Experimental Economics Laboratory Publications 2004-02, McMaster University.
  4. Andreoni,J. & Croson,R., 1998. "Partners versus strangers : random rematching in public goods experiments," Working papers 11, Wisconsin Madison - Social Systems.
  5. Farrell, Joseph & Scotchmer, Suzanne, 1988. "Partnerships," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 279-97, May.
  6. Brown, Gardner, Jr, 1974. "An Optimal Program for Managing Common Property Resources with Congestion Externalities," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 163-73, Jan.-Feb..
  7. Smith, Vernon L, 1985. "Experimental Economics: Reply," American Economic Review, American Economic Association, vol. 75(1), pages 264-72, March.
  8. Kenneth S. Chan & Stuart Mestelman & Rob Moir & R. Andrew Muller, 1998. "Heterogeneity and the Voluntary Provision of Public Goods," Department of Economics Working Papers 1998-04, McMaster University.
  9. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December.
  10. Croson, Rachel T. A., 1996. "Partners and strangers revisited," Economics Letters, Elsevier, vol. 53(1), pages 25-32, October.
  11. Parzival Copes, 1986. "A Critical Review of the Individual Quota as a Device in Fisheries Management," Land Economics, University of Wisconsin Press, vol. 62(3), pages 278-291.
  12. Hackett Steven & Schlager Edella & Walker James, 1994. "The Role of Communication in Resolving Commons Dilemmas: Experimental Evidence with Heterogeneous Appropriators," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 99-126, September.
  13. Andereoni, J., 1988. "Why Free Ride? Strategies And Learning In Public Goods Experiments," Working papers 375, Wisconsin Madison - Social Systems.
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Cited by:
  1. Martin D. Heintzelman & Stephen W. Salant & Stephan Schott, 2005. "Partnerships: A Potential Solution to the Common-Property Problem but a Problem for a Antitrust Authorities," Levine's Working Paper Archive 784828000000000040, David K. Levine.
  2. Matthew J. Baker & Kurtis Swope, 2004. "Sharing, Gift-Giving, and Optimal Resource Use Incentives in Hunter-Gatherer Society," Departmental Working Papers 8, United States Naval Academy Department of Economics.

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