Environmental and Resource Economics

, Volume 65, Issue 4, pp 747–772 | Cite as

Payments or Persuasion: Common Pool Resource Management with Price and Non-price Measures

Article
First Online:
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Abstract

We use lab experiments to study policies that address common pool resource overuse. We look at a price mechanism, specifically a Pigouvian subsidy, and four non-price interventions. The non-price policies are information alone, information with a normative message, communication alone, and normative messages with communication allowed. In all experiment sessions, no intervention occurs in the first seven and last seven rounds, allowing us to examine the effects of introducing and taking away a policy. The subsidy leads to near-efficient extraction, but surprisingly leads groups that were not over-extracting to also reduce extraction. This over-compliance decreases efficiency, although on net the subsidy is the most efficiency-enhancing intervention. Information provision, communication, normative appeals, and normative appeals combined with communication all reduce over-extraction (though by less than the subsidy) without exacerbating over-compliance; however, the effects of information alone and communication alone are small and not robust. The non-price policies cause a decline in over-extraction of from 0.549 (information) to 11.441 % (normative appeals with communication). These effects are of the same order of magnitude as the effects seen in major field studies of conservation messaging. The subsidy has the worst persistence properties (after the intervention ceases), while normative messages with communication have the best.

Keywords

Common pool resource Communication Information  Pigouvian subsidy Social norms Voluntary cooperation  Laboratory experiment 

JEL Classification

H41 H21 C91 C92 D62 D83 
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Supplementary material

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Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  1. 1.School of BusinessGeorgia Gwinnett CollegeLawrencevilleUSA
  2. 2.Department of EconomicsWilliams CollegeWilliamstownUSA

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