When should the regulator be left alone in the commons? How fishing cooperatives can help ameliorate inefficiencies

Abstract

This paper examines a common-pool resource where quotas and fines are set by a regulator, an artisanal organization (cooperative), or both. We analyze the interaction between these two regulatory agencies under a flexible policy regime, where quotas and fines can be revised across periods, and under an inflexible policy regime, where they cannot. We show that inefficiencies arise in the inflexible regime, but they are reduced when the two agencies coexist. Overall, we demonstrate that the artisanal organization may be preferred when environmental damages are low, but the regulator may be preferable otherwise.