Management of joint resources: Regulations, risk and behavior

In this paper, some effects of political uncertainty are reviewed and the results used to evaluate shared natural resources, but in particular fisheries, with the following characteristics:
- Regulations exist, but individuals or firms have a choice whether to comply with the rules and regulations or not.
- Some level of political uncertainty exists about these rules and regulations, in particular as to if, when and how they might change in the future.
In light of previous literature, we look at how the presence of political uncertainty influences agents’ behavior in these situations with regards to investment, compliance and rent seeking efforts, and also how the optimal behavior is affected by a situation with joint management of the resource between two or more countries
Whereas more formal analysis is needed, in particular empirical studies, the main result is that political uncertainty will have a negative effect on investment, which in turn will have other negative consequences. This is intuitive. Uncertainty is likely to increase compliance and reduce rent seeking, but these effects are likely to be much less important. Hence, political uncertainty is always likely to be undesirable. In a joint fishery even more so, as each nation here has the opportunity to make the other country carry some of the costs related to the uncertainty with regards to policy.