Renewable resource management, user heterogeneity, and the scope for cooperation

Cooperation can increase the efficiency of commonly-owned renewable resource use. However, received knowledge is that, absent side payments, cooperative solutions are more difficult to achieve the less homogenous the agents involved. We revisit this claim by analyzing how differences in the opportunity costs of resource harvesting affect the scope for Pareto-improving contracts, where contracting is with respect to the type of technology used. We find that the scope for cooperation is largest for intermediate levels of heterogeneity.