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 ##### Abstract
 
-Economic theories predict that unrestricted access and capitalization can lead to negative externalities in common-pool resources. However, limited evidence exists regarding how open access influences competition structure and inefficiencies in the commons. This study addresses this gap by developing a model of industry dynamics and applying it to data from the American whaling industry. The estimation results show that strategic interactions stimulate entry and investment while delaying the industry shakeout. Furthermore, the endogenous responses of resource stock and market prices exacerbate these tendencies. This paper demonstrates that implementing a differentiated Pigouvian tax, taking into account individual heterogeneity, can result in significant welfare improvements.
+Economic theories predict that unrestricted access and capitalization lead to inefficient allocation of common-pool resources. However, limited evidence exists regarding how open access shapes industry structure and welfare in the commons. This study addresses this gap by developing a model of industry dynamics and applying it to data from the American whaling industry. The estimation results show that strategic interactions stimulate entry and investment while delaying the industry shakeout. Furthermore, the endogenous responses of resource stock and market prices exacerbate these tendencies. This paper underscores the potential for significant welfare improvements through the implementation of taxes and subsidies aimed at guiding dynamic behaviors.
 
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