Dynamic Efficiency of Common-pool Resource Exploitation
We conduct the first empirical investigation of common-pool resource users’ dynamic and strategic behavior at the micro level using real-world data. Fishermen’s strategies in a fully dynamic game account for latent resource dynamics and other players’ actions, revealing the profit structure of the fishery. We compare the fishermen’s actual and socially optimal exploitation paths under a time-specific limited entry system and find a sizable dynamic externality. Individual fishermen respond to other users by exerting effort above the optimal level. Congestion is costly instantaneously but is beneficial in the long run because it partially offsets dynamic inefficiencies.