Florian Diekert (University of Augsburg)
Managing natural resources by enforcing output quotas or by installing property rights is costly, challenging, and requires strong state capacity. In many settings, especially in developing economies, the only realistic formal policy to avert the tragedy of the commons is to regulate production inputs. Consequently, compliance with input controls is a key concern for policy makers. I develop a stylized size-structured model of a tropical fishery to study two ways to increase compliance under open-access: First, the effect of increasing enforcement effort. Second, the effect of a subsidy for nets with legal mesh size. I use the model to identify the conditions under which a subsidy outperforms traditional enforcement policies and improves outcomes despite encouraging entry.