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Payments or Persuasion: Common Pool Resource Management with Price and Non-price Measures

Author

Listed:
  • Jason Delaney

    () (Georgia Gwinnett College)

  • Sarah Jacobson

    () (Williams College)

Abstract

Abstract We use lab experiments to study policies that address common pool resource overuse. We look at a price mechanism, specifically a Pigouvian subsidy, and four non-price interventions. The non-price policies are information alone, information with a normative message, communication alone, and normative messages with communication allowed. In all experiment sessions, no intervention occurs in the first seven and last seven rounds, allowing us to examine the effects of introducing and taking away a policy. The subsidy leads to near-efficient extraction, but surprisingly leads groups that were not over-extracting to also reduce extraction. This over-compliance decreases efficiency, although on net the subsidy is the most efficiency-enhancing intervention. Information provision, communication, normative appeals, and normative appeals combined with communication all reduce over-extraction (though by less than the subsidy) without exacerbating over-compliance; however, the effects of information alone and communication alone are small and not robust. The non-price policies cause a decline in over-extraction of from 0.549 (information) to 11.441 % (normative appeals with communication). These effects are of the same order of magnitude as the effects seen in major field studies of conservation messaging. The subsidy has the worst persistence properties (after the intervention ceases), while normative messages with communication have the best.

Suggested Citation

  • Jason Delaney & Sarah Jacobson, 2016. "Payments or Persuasion: Common Pool Resource Management with Price and Non-price Measures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 65(4), pages 747-772, December.
  • Handle: RePEc:kap:enreec:v:65:y:2016:i:4:d:10.1007_s10640-015-9923-z
    DOI: 10.1007/s10640-015-9923-z
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    Cited by:

    1. Ashish R. Hota & Shreyas Sundaram, 2018. "Controlling Human Utilization of Failure-Prone Systems via Taxes," Papers 1802.09490, arXiv.org.
    2. Boun My, Kene & Ouvrard, Benjamin, 2019. "Nudge and tax in an environmental public goods experiment: Does environmental sensitivity matter?," Resource and Energy Economics, Elsevier, vol. 55(C), pages 24-48.
    3. Matthew Gibson & Jamie T. Mullins & Alison Hill, 2019. "Climate Risk and Beliefs: Evidence from New York Floodplains," Department of Economics Working Papers 2019-02, Department of Economics, Williams College.
    4. Laura K. Gee & Xinxin Lyu & Heather Urry, 2017. "Anger Management: Aggression and Punishment in the Provision of Public Goods," Games, MDPI, Open Access Journal, vol. 8(1), pages 1-28, January.
    5. repec:kap:enreec:v:73:y:2019:i:3:d:10.1007_s10640-019-00342-x is not listed on IDEAS
    6. Benjamin Ouvrard & Anne Stenger, 2017. "Nudging with heterogeneity in terms of environmental sensitivity : a public goods experiment in networks," Working Papers of BETA 2017-36, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    7. Oniki, S. & Berhe, M. & Negash, T., 2018. "Roles of the social norms on participation in the communal land distribution program in Ethiopia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277070, International Association of Agricultural Economists.
    8. repec:kap:enreec:v:73:y:2019:i:4:d:10.1007_s10640-018-0283-3 is not listed on IDEAS

    More about this item

    Keywords

    Common pool resource; Communication; Information; Pigouvian subsidy; Social norms; Voluntary cooperation; Laboratory experiment;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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