Property Rights With Biological Spillovers: When Hardin Meets Meade
In an overlapping generations setup the authors address the issue of the optimal number of property rights to allocate over a natural resource when the goal is to maximize the stock of the natural resource at the steady state. They assume that the effect of the property rights regime on the evolution of the resource is twofold: through biological spillovers and through monitoring costs. Property rights are assigned to local communities, which can decide whether to cooperate or not. The outcome in the strategic setting is hence compared to the one in the cooperative setup. A fiscal policy able to decentralize the cooperative outcome is studied.