Competitive Lobbying over Common Pool Resource Regulations
2017
Freeman, Matthew A. | Anderson, Christopher M.
Common-pool resource regulations are developed through a combination of resource assessment, economic analysis, and politics. We investigate a management institution wherein users can influence a proposed common extraction cap through costly effort, or lobbying. Our model incorporates two user types: a few harvesters who efficiently handle extraction externalities, and a larger number who do not. Without regulation, we observe the efficient harvesters extracting more than the social optimum, consistent with Nash equilibrium. Given the opportunity to lobby, we observe harvesters contributing to move inefficient proposed caps toward more efficient levels. However, lobbying is a public good and, consistent with Nash equilibrium, the user type with weaker preference free rides on the type with stronger preferences leading to insufficient lobbying and inefficient regulations, especially when the cap must be lowered. This highlights an important limitation to participatory governance mechanisms when participation is costly.
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