Update 1.md

content/papers/1.md

@@ -12,7 +12,7 @@ summary: "How to efficiently allocate common-pool resources over the long run? T
 
 ##### Abstract
 
-Competitive entry and investment in the commons can result in resource depletion and congestion externalities. But little evidence exists on the efficient allocation of common-pool resources 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 estimated model reveals a prevailing excess of players and capital compared to the first-best allocation. Counterfactual simulation quantifies negative externalities by identifying the shadow values of whaling. This underscores the significance of industry structure evolution in designing policies to achieve efficient allocation.
+Competitive entry and investment in the commons can lead to resource depletion and congestion externalities. However, little evidence exists on the efficient allocation of common-pool resources 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 estimated model reveals a prevailing excess of players and capital compared to the first-best allocation. Counterfactual simulation quantifies negative externalities by identifying the shadow values of whaling. An optimal tax system achieves efficient allocation, but only when the policy design incorporates the evolution of industry structure.
 
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