Mitigating the Tragedy of the Commons

Abstract

It is well known that a common property resource such as the fisheries leads to internal technological diseconomies. See Worcester [22] and Bell [2] as well as the classic articles by Gordon [7] and Scott [19] dealing with property rights and the fisheries. That is, the structure of property rights leads to social welfare losses or what Hardin [9] called the tragedy of the commons. The purpose of this paper is to illustrate and quantify how social welfare losses have been mitigated as the private property sector has emerged. An excellent test case is the growth in pond reared crawfish on private property and its impact in mitigating social welfare losses resulting from the harvesting of common property Louisiana wild crawfish. The demand for crawfish will be examined first, followed by an analysis of the yield function for wild crawfish. We shall see that the empirical results are consistent with the North and Thomas [15] thesis on the role of property rights in economic growth and the more recent theory of contracting advanced by Johnson and Libecap [10] to explain the persistence of common property.