Can the Threat of Economic Sanctions Ensure the Sustainability of International Fisheries? An Experiment of a Dynamic Non-cooperative CPR Game with Uncertain Tipping Point

Abstract

Complex dynamic systems such as common-pool resource systems can undergo a critical shift at a given threshold, the so-called tipping point, which potentially requires substantial changes from the management system. We present in this research a framed laboratory experiment design to examine how the threat of economic sanctions influences the strategic management of a common-pool resource. We use the context of the East Atlantic bluefin tuna international fishery as it has been the archetype of an overfished and mismanaged fishery until a dramatic reinforcement of its regulations followed the threat of a trade ban. We consider endogenous threats and examine their effects on cooperation through harvest decisions taken in the context of non-cooperative game theory in which cooperation could be sustained using a trigger strategy. Our experiment results show that the threat of economic sanctions fosters more cooperative behaviors, less over-exploitation, and a more precautionary management of resources, reducing the economic rent dissipation. This result is exacerbated when the location of the tipping point that triggers the economic sanction is uncertain. In order to avoid free-riding behaviors and foster the emergence of a self-enforcing agreement, we suggest to introduce economic sanctions, such as trade restrictions, associated with uncertain biological limit reference points.

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Notes

  1. 1.

    The experimental design we use in this paper can be regarded as providing a limiting case where transaction costs linking to communication are prohibitively costly rendering the difficulties to reach an agreement within Regional Fisheries Management Organisation (RFMO) such as ICCAT.

  2. 2.

    As in Lindahl et al. (2016), to ensure an unknown time horizon, we varied the end-time between and within groups.

  3. 3.

    This cost function implicitly assumes that the cost per unit of fishing effort is constant and the catch per unit of effort is proportional to the size of the exploited stock.

  4. 4.

    A 40% uniform uncertainty range was selected to represent a high uncertainty level around the position of Blim.

  5. 5.

    Punishment strategies may last a finite number of periods. As we are interested in the effects of increasing the fishing through the introduction of a tipping point we keep simple strategies.

  6. 6.

    A more general way to describe the conditions for cooperation can be defined following the logic of Mason and Phillips (1997). Consider a cooperative harvest function, \({\text{y}}_{coop} \left( {B_{t} } \right)\), a trigger strategy can be described by playing cooperatively \({\text{y}}_{coop} \left( {B_{t} } \right)\), as long as no one has defected. If one of the participants deviates from the optimal solution, then others will punish him by fishing down the stock with harvest \({\text{y}}_{dev} \left( {B_{t} } \right)\), afterwards and forever. Using the cooperative harvest and resulting stock path, we may derive the net present value for the player under cooperation \({\text{NPV}}_{coop} \left( {B_{t} } \right)\). Similarly, we may calculate the non-cooperative value function, \({\text{NPV}}_{dev} \left( {B_{t} } \right)\). The trigger strategy forms a subgame perfect equilibrium if the defection is not profitable, irrespective of the current state.

    $${\text{NPV}}_{coop} \left( {B_{t} } \right) > \pi_{dev} \left( {y_{dev} \left( {B_{t} } \right)} \right) + \delta NPV_{dev} \left( {B_{t} } \right)$$
  7. 7.

    Myopic behavior constitutes a focal point distinguishable as the symmetric harvest decision which maximises the current payoff (diagonal in the payoff table in the supplementary material Appendix D).

  8. 8.

    We also test the potential effect of playing 2 games (phases) sequentially. We did not find any significant difference between phases using the Mann–Whitney–Wilcoxon test on group averages (supplementary material Appendix I).

  9. 9.

    We also compared GEE models to random group effect generalised linear models (GLMM with package ‘lme4’ Bates et al. 2015 in R, supplementary material Appendix J). The results are qualitatively similar with a higher magnitude of treatment and free-rider participant coefficients.

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Acknowledgements

We are thankful for valuable comments received from Marc Willinger, Stefano Farolfi, Dimitri Dubois, Nils Ferrand, Sander De Waard, members of the Laboratoire d’Economie Expérimentale de Montpellier (LEEM) working group and members of the IM2E Experiments on Uncertainty and Social Relations workshop. We thank Julien Lebranchu for his computer support, Dimitri Dubois for his experiment assistance and Anne-Catherine Gandrillon for her language corrections. We are also thankful for valuable comments received from two anonymous reviewers. P. Guillotreau and T. Vallée acknowledge the financial support of the French research ANR program CIGOEF (ANR-17-CE32-0008) and DOCKSIDE project, co-funded by the Erasmus Plus Programme of the European Union. Finally, we acknowledge the University of Nantes and IFREMER for the funding of a PhD. Last but not least, we would like to thank our experiment participants.

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Jules, S., Sylvain, B., Patrice, G. et al. Can the Threat of Economic Sanctions Ensure the Sustainability of International Fisheries? An Experiment of a Dynamic Non-cooperative CPR Game with Uncertain Tipping Point. Environ Resource Econ 76, 153–176 (2020). https://doi.org/10.1007/s10640-020-00419-y

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Keywords

  • Common-pool resources
  • Experimental economics
  • Fisheries management
  • International fisheries
  • Policy making
  • Tipping points