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 ##### Abstract
 
-Competitive entry and investment in common-pool resources can lead to congestion and depletion of resource stocks. Yet, little evidence exists on the efficient allocation of resources in the commons when industry structure is flexible over the long run. This paper develops a model of common-pool industry dynamics and applies it to the 19th-century American whaling industry, a global commons for oil production. The analysis reveals a prevailing excess of players and capital compared to the first-best allocation. As a remedy for negative externalities, optimal tax policy achieves a sizable welfare gain. However, policies that overlook the long-run industry structure deliver suboptimal outcomes.
+Competitive entry and investment in the commons can lead to congestion and resource depletion. Yet, little evidence exists on the efficient allocation of common-pool resources when industry structure is flexible over the long run. This paper develops a model of common-pool industry dynamics and applies it to the 19th-century American whaling industry, a global commons for oil production. The analysis reveals a prevailing excess of players and capital compared to the first-best allocation. As a remedy for negative externalities, optimal tax policy achieves a sizable welfare gain. However, policies that overlook the long-run industry structure deliver suboptimal outcomes.
 
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