Status Concern and the Exploitation of Common Pool Renewable Resources

We study the possibility of aggravation of the tragedy of the commons when the players of the game care about social status. In our model the players share access to a renewable resource and sell their production in a common market where they are oligopolists. We depart from the mainstream literature on common pool resource oligopolies by considering that each player cares about her social status. We identify two channels that may impact a player’s welfare: harvest and profits. Under the first channel, a player has a bump in her utility when her harvest is larger than the average harvest of the rest of the players. In this case we show that the presence of this channel exacerbates the tragedy of the commons. Under the second channel, a player enjoys a bump in her utility if she manages to earn more profits than the average profit of the other players. In this case we show that social status concern may temporarily alleviate the tragedy of the commons: it results in a decrease of extraction over an interval of stock sizes.
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