Does the Existence of a Public Good Enhance Cooperation among Users of Common-Pool Resources?

Jan Tore Solstad and Kjell Arne Brekke

Abstract

Without resorting to the folk theorem or to altruistic preferences, we demonstrate that the problem of overharvesting among individually rational harvesters in a local commons vanishes if the harvesters share, and voluntarily contribute to, some public good. Formulating the model as a two-stage sequential game, the harvesting of a renewable natural resource takes place at the first stage. The observed harvesting surplus is then used for buying private goods and contributing to public goods at the second stage. In this setting, the model shows that the harvesters share an individual objective of maximizing total harvesting surplus. (JEL H41)

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