Proportional Cutbacks as an Institution for Promoting International Cooperation: Success and Limitations

Abstract

Published as: "The Power and Limitations of Proportional Cutbacks in a Common-Pool Resource," (with R. Gardner, A. Herr, and E. Ostrom), Journal of Development Economics, Vol. 62, 2000, 515-533.

"This paper studies the success and limitations of proportional cutbacks for improving the performance of common pool resources (CPRs) which cross national boundaries. Two field cases, one success and one failure, motivate the analysis. For symmetric CPRs, we establish the existence of efficiency enhancing proportional cutbacks. We then introduce complications that arise in the presence of asymmetries, where there are high value types and low value types. This asymmetry again induces a continuum of proportional cutbacks that raise efficiency above Nash equilibrium. Calibrating a linearquadratic CPR model to global carbon dioxide emissions, the efficiency and distributional consequences of proportional cutbacks like those embodied in the Kyoto Protocol are derived."