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Inequality And Conservation On The Local Commons: A Theoretical Exercise

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  • Jeff Dayton-Johnson

    (Dalhousie University)

  • Pranab Bardhan

    (University of California, Berkeley)

Abstract

To analyse the effect of asset inequality on co--operation within a group, we consider a two--player nonco--operative model of conservation of a common--pool resource. Overexploitation by one user affects another"s payoff by reducing the next--period catch. We give necessary and sufficient conditions such that conservation is a Nash equilibrium, and show that increasing inequality does not, in general, favour full conservation. However, once inequality is sufficiently great, further inequality can raise efficiency. Thus, the relationship between inequality and economic efficiency is U--shaped. Finally, we analyse the implications for conservation if players have earning opportunities outside the commons. Copyright 2002 Royal Economic Society

Suggested Citation

  • Jeff Dayton-Johnson & Pranab Bardhan, 2002. "Inequality And Conservation On The Local Commons: A Theoretical Exercise," Economic Journal, Royal Economic Society, vol. 112(481), pages 577-602, July.
  • Handle: RePEc:ecj:econjl:v:112:y:2002:i:481:p:577-602
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    References listed on IDEAS

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