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Output sharing in partnerships as a common pool resource management instrument

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  • Stephan Schott
  • Neil Buckley
  • Stuart Mestelman
  • R. Muller

Abstract

Many economic environments are susceptible to either free-riding or overuse. Common pool resources (CPRs) fall in the latter category. Equally sharing the output of a CPR in partnerships introduces a free-riding incentive that may offset overuse. Socially optimal harvesting can be induced by dividing the set of resource users into a number of partnerships in such a way that each resource users’ tendency to over-harvest from the resource is exactly offset by his or her tendency to free-ride on the contributions of others. We conduct a laboratory experiment to assess the performance of this partnership solution by introducing equal-sharing subgroups of size one, four and six into a twelve-person CPR environment. Group assignment is either unchanging throughout a 15 period session or randomly mixed each decision round. Group size significantly affects aggregate effort, while group assignment makes no significant difference. The distribution of total payoffs is more equitable for randomly mixed groups. Implications of our results for voluntary and centralized implementations of the partnership solution are discussed. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Stephan Schott & Neil Buckley & Stuart Mestelman & R. Muller, 2007. "Output sharing in partnerships as a common pool resource management instrument," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(4), pages 697-711, August.
    • Handle: RePEc:kap:enreec:v:37:y:2007:i:4:p:697-711
    DOI: 10.1007/s10640-006-9062-7
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    References listed on IDEAS

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    1. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
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    4. Jeffrey Carpenter & Erika Seki, 2011. "Do Social Preferences Increase Productivity? Field Experimental Evidence From Fishermen In Toyama Bay," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 612-630, April.
    5. Charles N. Noussair & Charles R. Plott & Raymond G. Riezman, 2013. "An Experimental Investigation of the Patterns of International Trade," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 17, pages 299-328, World Scientific Publishing Co. Pte. Ltd..
    6. 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.
    7. 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.
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    Cited by:

    1. Bernard, Mark & Dreber, Anna & Strimling, Pontus & Eriksson, Kimmo, 2013. "The subgroup problem: When can binding voting on extractions from a common pool resource overcome the tragedy of the commons?," Journal of Economic Behavior & Organization, Elsevier, vol. 91(C), pages 122-130.
    2. Jan Tore Solstad & Kjell Arne Brekke, 2011. "Does the Existence of a Public Good Enhance Cooperation among Users of Common-Pool Resources?," Land Economics, University of Wisconsin Press, vol. 87(2), pages 335-345.
    3. Neil J. Buckley & Stuart Mestelman & R. Andrew Muller & Stephan Schott & Jingjing Zhang, 2013. "Communication and Output Sharing in Common Pool Resource Environments," Department of Economics Working Papers 2013-06, McMaster University.
    4. Stefan Ambec & Alexis Garapin & Laurent Muller & Arnaud Reynaud & Carine Sebi, 2014. "Comparing Regulations to Protect the Commons: An Experimental Investigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(2), pages 219-244, June.
    5. Neil J. Buckley & Stuart Mestelman & R. Andrew Muller & Stephan Schott & Jingjing Zhang, 2010. "Effort provision and communication in teams competing over the commons," IEW - Working Papers 503, Institute for Empirical Research in Economics - University of Zurich.
    6. Torben Klarl, 2013. "Market dynamics, dynamic resource management and environmental policy in the context of (strong) sustainability," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 861-888, September.
    7. Lysenko, Dmitry & Schott, Stephan, 2019. "Food Security and Wildlife Management in Nunavut," Ecological Economics, Elsevier, vol. 156(C), pages 360-374.
    8. Josh Cherry & Stephen Salant & Neslihan Uler, 2015. "Experimental departures from self-interest when competing partnerships share output," Experimental Economics, Springer;Economic Science Association, vol. 18(1), pages 89-115, March.
    9. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
    10. Neil Buckley & Stuart Mestelman & R. Andrew Muller & Stephen Schott & Jingjing Zhang, 2017. "Do the Number of Appropriators from the Commons Matter in Controlled Laboratory Environments?," Department of Economics Working Papers 2017-09, McMaster University.
    11. Kaffine Daniel T & Costello Christopher, 2011. "Unitization of Spatially Connected Renewable Resources," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-31, March.
    12. Matthew J. Baker & Kurtis J. Swope, 2021. "Sharing, gift-giving, and optimal resource use in hunter-gatherer society," Economics of Governance, Springer, vol. 22(2), pages 119-138, June.
    13. Stoop, Jan & van Soest, Daan & Vyrastekova, Jana, 2018. "Rewards and cooperation in social dilemma games," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 300-310.
    14. Neil J. Buckley & Stuart Mestelman & R. Andrew Muller & Stephan Schott & Jingjing Zhang, 2018. "The Effects of Communication on the Partnership Solution to the Commons," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 363-380, June.
    15. Neil Buckley & Stuart Mestelman & R. Andrew Muller & Stephan Schott & Jingjing Zhang, 2009. "Shut Up and Fish: The Role of Communication when Output-Sharing is used to Manage a Common Pool Resource," Department of Economics Working Papers 2009-15, McMaster University.

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    More about this item

    Keywords

    Common pool resources; Partners and strangers; Experimental economics; Collective action; Natural resource management; Q20; C91; D70; C92;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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