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Status concern and the exploitation of common pool renewable resources

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  • Benchekroun, Hassan
  • Long, Ngo Van

Abstract

We examine the impact of social status concern in a common pool renewable resource oligopoly. A small number of players share access to a common pool resource and sell their production in a common market where they are oligopolists. We depart from the mainstream literature on common pool resource oligopolies by considering that each player cares about her social status. We allow for two channels to impact a player's welfare: harvest and profits. Under the first channel, a player has a bump in her utility when her harvest is larger than the average harvest of the rest of the players. In this case we show that the presence of this channel exacerbates the tragedy of the commons. Under the second channel, a player enjoys a bump in her utility if she manages to earn more profits than the average profits of the other players. In this case we show that social status concern may temporarily alleviate the tragedy of the commons: it results in a decrease of extraction over an interval of stock sizes.

Suggested Citation

  • Benchekroun, Hassan & Long, Ngo Van, 2016. "Status concern and the exploitation of common pool renewable resources," Ecological Economics, Elsevier, vol. 125(C), pages 70-82.
  • Handle: RePEc:eee:ecolec:v:125:y:2016:i:c:p:70-82
    DOI: 10.1016/j.ecolecon.2016.02.005
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    Keywords

    Social status; Relative performance; Envy; Common property resources; Oligopoly;

    JEL classification:

    • 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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