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Non-Parametric Tests of the Tragedy of the Commons

Author

Listed:
  • H. Spencer Banzhaf
  • Yaqin Liu
  • Martin Smith
  • Frank Asche

Abstract

Extending recent results in the industrial organization literature (Carvajal et al. 2013), we de-rive non-parametric tests of behavior consistent with the tragedy of the commons model. Our approach derives testable implications of such behavior under any arbitrarily concave, differentiable production function of total inputs and when individual extractors of the resource have any arbitrary convex, differentiable cost of supplying inputs. We extend the tests to account for behavioral errors in observed data and derive statistical tests based on “how far off” the marginal costs are from those that are consistent with the model. We also extend the tests to allow for sampling error and/or measurement error. Applying our approach to panel data of Norwegian fishers, we find evidence rejecting the tragedy of the commons model. Significantly, we find that rejection rates of the model increase after property rights reforms moved the fishery away from the tragedy of the commons.

Suggested Citation

  • H. Spencer Banzhaf & Yaqin Liu & Martin Smith & Frank Asche, 2019. "Non-Parametric Tests of the Tragedy of the Commons," NBER Working Papers 26398, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:26398
    Note: EEE TWP
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    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation

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