Technological Change and the Tragedy of the Commons: The Lofoten Fishery Over Hundred and Thirty Years.

Why did the Lofoten cod fishery in Norway – a fishery on one of the world’s richest spawning grounds remain less productive than alternative industries until the mid-1960s, despite important modernization of the fleet and fishing gear, improvements in technology and institutional change? We analyze the effect of technological change on labor and total factor productivity as well as exit and entry patterns using detailed data for 130 years. Our findings support the important role of natural resources in productivity and improvements in welfare in natural resource-based industries. The total factor productivity has risen faster than labor productivity in the fishery, indicating that the considerable technological progress in this industry has to some extent been neutralized by the decline in the fish stock. Open access to the fish resource most probably led to this situation. * We thank Ola Grytten, The Norwegian School of Economics and Business Administration, for access to data on wages for the manufacturing and agricultural industry in Norway.