Abstract
This paper analyzes the impact of trade on resource stocks through endogenously selected property rights regimes. We present a model that shows welfare can be maximized when a community degrades its resource stock under optimally selected property rights regimes after opening to trade. Results from a laboratory experiment show that labor allocations, property rights regimes and resource stock levels do not follow the optimal dynamic Nash equilibrium path. Instead a non-optimal dynamic equilibrium path is selected due to incorrect initial labor allocation and property rights regime choices.
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