Essays on common-property resource management and environmental regulation

With some common-property natural resources, cooperative behavior by resource users persists over a long period. The first essay of this thesis presents a noncooperative dynamic game with overlapping generations of players using a common-property resource. This study analyzes how inequality among resource users and their access to outside markets influence the feasibility of cooperation as an equilibrium of the game. The model predicts that, depending on the agents' harvest sharing rule, the conditions under which homogeneous agents can cooperate in equilibrium may not be sufficient for cooperation when agents differ in harvesting productivity. It also suggests that integration of local commons to the outside market economy may have a negative effect on efficient local resource management.; The second essay studies the efficiency of self governance where a group of resource users have costly means to monitor over-harvesting by members and entry by outsiders. If the group chooses its optimal size in each period, the equilibrium results in smaller resource rents than the second-best level given costly monitoring. If the exogenous harvest price is low, the coalition does not generate positive resource rents. For harvest price large enough, the coalition generates positive resource rents by deterring outsiders' access even though a large harvest price induces outsiders to enter the commons. This finding explains the emergence of collective action in common-pool resource use as the profitability of harvesting increases.; The third essay studies environmental regulation where the regulator gains information about environmental damages over time and a regulated firm chooses emissions abatement technology given regulation. The essay compares environmental policy under discretion, in which policy is updated upon learning new information, versus under rules, in which policy is not updated. With little uncertainty about future damages, rules are superior to discretion because discretion gives the firm an incentive to distort investment in order to influence future regulation. However, with large uncertainty, discretion is superior to rules because it allows regulation to incorporate new information. Taxes are superior to standards under discretion regardless of the relative slopes of marginal costs and marginal damages for the case of quadratic abatement costs and damages.