Chris Costello (9/21/16)

Chris CostelloChris Costello

UC Santa Barbara

“Private Eradication of Mobile Public Bads”

Abstract: We consider analytically the non-cooperative behavior of many private property owners who each controls the stock of a public bad such as an invasive weed species, infectious disease, fire, or agricultural pest.  The stock of the public bad can grow and disperse across a spatial domain of arbitrary size.  In this setting, we characterize the conditions under which private property owners will control or eradicate, and determine how this decision depends on property-specific environmental features and on the behavior of other landowners.  We show that high mobility or lower control by others result in lower private control. But when the marginal dynamic cost of the bad is sufficiently large, we find that complete eradication may be privately optimal (despite the lack of consideration of others’ welfare) — in these cases, eradication arises in the non-cooperative game and is also socially optimal so there is, in effect, no externality. Finally, when property harboring the bad is not owned, or is owned in common, we derive the side payments required to efficiently control the mobile public bad.