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Do Static Externalities Offset Dynamic Externalities? An Experimental Study of the Exploitation of Substitutable Common-Pool Resources

Published online by Cambridge University Press:  15 September 2016

Gastón A. Giordana ,
Marielle Montginoul  and
Marc Willinger
Gastón A. Giordana
Affiliation:
Central Bank of Luxembourg in Luxembourg, Luxembourg. The research presented in this paper was done mainly during his Ph.D. work at Lameta and Cemagref in Montpellier, France
Marielle Montginoul
Affiliation:
researcher at Cemagref UMR G-EAU in Montpellier, France
Marc Willinger
Affiliation:
Université de Montpellier 1 UMR Lameta in Montpellier, France
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Abstract

Overexploitation of coastal aquifers may lead to seawater intrusion, which irreversibly degrades groundwater. The seawater intrusion process may imply that its consequences would not be perceptible until after decades of accumulated overexploitation. In such a dynamic setting, static externalities may enhance the users’ awareness about the resource's common nature, inducing more conservative individual behaviors. Aiming to evaluate this hypothesis, we experimentally test predictions from a dynamic game of substitutable common-pool resource (CPR) exploitation. The players have to decide whether to use a free private good or to extract from one of two costly CPRs. Our findings do not give substantial support to the initial conjecture. Nevertheless, the presence of static externalities does induce some kind of payoff reassurance strategies in the resource choice decisions, but these strategies do not correspond to the optimum benchmark.

Keywords

common-pool resourcessubstitutable goodsdynamic externalitiessurvival dataproportional hazardexperiment

Information

Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 39 , Issue 2 , April 2010 , pp. 305 - 323
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

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