Threatened species as public goods and public bads - An application to wild predators in Sweden

This paper discusses Pareto efficient allocations of an environmental commodity, which is both a public good and a public bad, with an application to the Scandinavian problem of conserving wild predators that are killing semi-domesticated reindeer. The paper begins by briefly outlining this conflict. This is followed by a theoretical analysis employing a diagrammatic tool called the Kolm triangle, which is an analogue of an Edgeworth box in an economy with a public good. Bargaining, Pareto improving reallocations and the shape of the Pareto set are discussed, using a simple model, where one of the agents is involountarily contributing to a public good. The paper concludes with an analysis of income-loss compensations and incentives for illegal hunting of predators.