Essays on the Commons, Scarcity and Innovation

This dissertation contains three essays. In the first essay, I derive non-parametric tests of behavior consistent with the tragedy of the commons model based on recent results in the industrial organization literature (Carvajal et al. 2013). The approach derives testable implications of such behavior under any arbitrarily concave, differentiable production function of total inputs and when individual extractors of the resource have any arbitrary convex, differentiable cost of supplying inputs. I extend the tests to account for sampling errors in observed data and derive statistical tests based on “how far off” the marginal costs are from those that are consistent with the model. Applying this approach to panel data of Norwegian fishers, I find evidence rejecting the tragedy of the commons model. Significantly, I find that rejection rates of the model increase after property rights reforms moved the fishery away from the tragedy of the commons. In the second essays, I bridge the research in behavioral economics and environmental psychology and use designed experiments to test the effects of natural and urban environments on risk and time preferences. I examine whether time in green /urban space can improve economic decision making, helping people escape the poverty trap. Results from the laboratory show evidence that viewing urban pictures tend to reduce cognitive burdens and decrease risk averse behavior among people familiar with urban environment. In the third essay, I examine the effects of a carbon tax on energy-efficient innovations. In an influential paper, Popp (2002) empirically analyzed the effect of energy prices on energy-efficient innovations as measured by new patents. In this research, I explore the efficiency of carbon taxes, or the extent to which they can induce innovation through the price channel. Based on the estimates from Popp’s model, I estimate the costs directly added from a carbon tax based on emission coefficients of different types of fuels in the U.S. market and predict the number of new energy-efficient innovations that would be stimulated by a carbon tax. Results from the estimation indicate the significance of the price elasticity of energy-efficient innovations and limited effects from scaling up carbon taxes