Open Access and External Regulation of Recreational Common Pool Resources

Abstract

"This paper presents a game theoretic model of a tourism destination producing nature-based tourism services. Natural resources are used by the tourism industry both as input factors for production and amenities being part of the tourism product. The model captures this complexity and demonstrates that for the open access situation nontragedy equilibria are achievable for certain value of parameters. Public intervention is shown to be capable of improving resulting environmental quality when sufficiently enforced. However, public intervention can also result in lower environmental quality in the equilibrium due to crowding-out of motivation for voluntary initiatives, imperfect monitoring, corruption or the existence of unregulated firms. Thus, the model is a first contribution to analyze implications of different institutional designs on the economic incentives to undertake environmental initiatives by tourism firms."