Whose Preferences Count?: An Institutional Economic Analysis of Natural

Resource Use at Isle Royale National Park

by Rebecca Romsdahl

Graduate Teaching Assistant

Department of Resource Development

Michigan State University

Paper prepared for

AEC 810 Institutional and Behavioral Economics

A. Allan Schmid, Professor

Fall 1998

Abstract

The history of natural resource use on an island in Lake Superior, which

early French fur traders named Isle Royale, provides an example of the

basic processes involved in institutional change. Using the framework of

situation, structure and performance, (SSP) this institutional economic

analysis will trace a few of the most recent uses of Isle Royale's natural

resources through an ongoing power struggle defined by the question: whose

preferences count? Two groups dominate the first section of study which

will examine a shift in economies of scale from fish to tourists, involving

Isle Royale fishermen and two Duluth fisheries. The second section will

examine the shift to public ownership by the National Park Service and how

its wilderness preferences for use of the island's resources cause a

distinct division between two of the user groups--the boating and hiking

communities. The third section will look at a hypothetical situation

involving peak load demand problems within the hiking community. In

addition, a testable hypothesis will be proposed to examine the impacts of

an alternative institutional structure on whose preferences could influence

the use of Isle Royale's natural resources in the future.

Introduction

The history of natural resource use on an island in Lake Superior,

which early French fur traders named Isle Royale, provides an example of

the basic processes involved in institutional change.1 These processes

include cumulative and circular causation associated with economies of

scale and solutions to the problem of free riders for high exclusion cost

goods.

Isle Royale has been popular with people throughout its history; they

have come to the island to use its resources for many reasons and the

dominant preferences have shifted throughout the years. Different groups

have struggled to hold the necessary power to influence the types of

resource use occurring on the island. As a result, different uses of the

island's resources have often been incompatible between groups and shifts

in power have led to several changes in factor ownership. Two groups

dominate the first section of study which will examine a shift in economies

of scale from fish to tourists, involving Isle Royale fishermen and two

Duluth companies. The second section will examine the shift to public

ownership by the National Park Service and how its preferences for

wilderness use of the island's resources cause a distinct division between

two of the user groups--boaters and hikers. The third section will look at

a hypothetical situation involving peak load demand problems within the

hiking community.

In analyzing the shifting dominant preferences for natural resource

use, the different institutional structures will show how humans have the

tendency to put a certain part of the brain in charge of making decisions

depending on the characteristics of each situation--referred to as the

Multiple-Self-model of human cognition and behavior (Schmid, chpt. 2, p.

103, course packet, 1998; Gazzaniga, M.). This model is touched on in

relation to the "group-thinking" tendencies displayed by the fishermen and

the boaters, and the "individualist-thinking" of the hikers. The model is

important in institutional analysis for helping us understand why groups of

individuals may make one decision when alone and make a different decision

when in a particular group setting.

Using the framework of situation, structure and performance, (SSP)

this analysis will trace a few of the most recent uses of Isle Royale's

natural resources. The first two sections of this study will use

Institutional Change Analysis to examine the evolution of institutional

structures through Isle Royale's history. In the third section, a testable

hypothesis will be proposed to examine the impacts of an alternative

institutional structure on whose preferences influence the use of Isle

Royale's natural resources.

Section I:

Commercial Fishing Era

Early in this century, the use of Isle Royale's natural resources

were dominated by commercial fishing as the cold lake waters held plentiful

supplies of whitefish and herring. Despite the cold, lonely winters, a few

fishing families lived on the island year-round and many more lived there

seasonally. The isolation factors involved with living on an island

resulted in the need to develop strong "group-thinking" tendencies. The

families developed cognitive and behavioral reliance on each other; there

was a high level of trust and a deep sense of community due to the fact

that fishing Lake Superior was a life-threatening business which they

operated together. They held de facto factor ownership of the island's

resources through their fishing licenses even if they did not own any of

the land. In addition, because they were operating their commercial

fishing industry on an island, they had to establish contracts with Duluth

companies in order to get their fish to mainland markets. This is where

the interdependency in economies of scale comes into play.

Two fishery processing and supply companies in Duluth, Booth's and

Christiansen's, serviced the needs of the fishing families for many years

(Sivertson, p. 33, 1992). If economies of scale had been greater,

eventually, there may have been only one fishery servicing Isle Royale.

However, small freight ships, from both Booth's and Christiansen's, brought

supplies and mail to the island and picked up shipments of fish for sale on

the mainland. For many decades, the Isle Royale fishermen and the two

Duluth companies depended on each other for business survival. Without

Booth's and Christiansen's, the fishermen could not get their fish to

mainland markets before the fish spoiled, and without the fishermen, the

companies could not earn a profit.

Beginning in the 1920's, demand began to alter as an interest in

Isle Royale tourism grew. Several resorts opened on the island and began

to advertise for mainlanders to visit the wilderness. Around the same time

period, prices for fish began to drop in the market. In this economies of

scale situation, the boats and equipment comprised the Duluth companies'

fixed costs while their gear and crews were the marginal cost of another

trip. Therefore, since freight to and from the fishing families still paid

the fixed cost of each trip to the island, the marginal cost of an

additional pound of weight or another passenger was nearly zero, up to

capacity. This would present a difficult decision to the Duluth companies

as they must eventually choose which group, the fishing families or the new

tourists, would benefit from paying only the marginal cost; Booth's and

Christiansen's began to find that a higher profit could be made from

transporting more tourists than from transporting fish. Therefore, they

began to attract the new business with low cost tickets. Here we see the

circular and cumulative causation path associated with economies of scale.

The price would fall until additional passengers and additional passages

would allow the price to fall again.

Initially, when tourists were few, people seeking transportation to

Isle Royale paid part of the fixed cost for passage on one of the small

freight ships. However, any tourist passage depended on the amount of

space left over after the fishermen's supplies or market fish were on

board. Since the dominant business was fish, tourist comfort was minimal.

Fishing interests chose the quality of the good used both for fish and

tourists. If there was plenty of space aboard a boat, the tourist would be

able to purchase a ticket. However, if all of the space was taken by fish

and supplies, she would have to wait to see if the next ship had room for

her passage. The fishermen paid the Duluth companies a variable price, by

weight, for shipment of supplies and mail to the island and fish back to

mainland markets. However, after the decline in fish prices and as the

demand for tourist transportation rose, the Duluth companies began to offer

variable discount ticket prices to tourists seeking passage to Isle Royale.

A popular discount for vacationers, offered by Booth's, was a single price,

round-trip ticket for two passengers traveling together. These ticket

strategies emerged in order that the Duluth companies might compete with

the small private boaters who were seeking to specialize in passenger

service.

Marginal cost pricing piggy backing on the established fishing uses

increased the number of users of the recreation resources. These new users

in turn, created a demand for changes in effective ownership of the

island's natural resources. The new users applied political pressure in

the state of Michigan and across the U.S. in order to enhance their access

to the resources. In 1931, after many years of public lobbying, Isle

Royale was declared a National Park and use of the island's natural

resources was placed under the authority of the Department of Interior's

National Park Service (NPS) (Isle Royale National Park Draft General

Management Plan, p. 8). The establishment of NPS policies served the

function of establishing a set of use-rights for how the island's natural

resources would be used and by whom. These written and unwritten rights

became the basis for de facto factor ownership for use of the island's

resources. However, little thought was given to the possibility that the

lifestyle of the fishermen did not have to become incompatible with NPS

goals if managed differently (Schmid, chpt. 2, p. 103, course packet 1998).

Early National Park Service Era

The first two decades of NPS guidance supported the shift in

preferences toward tourists' use of the island, but not directly. The

number of people with preferences for tourism shifted and the use-rights

for the island's natural resources shifted to give more power/rights to the

tourist. Tourist visitation to Isle Royale was encouraged by the National

Park status of the island and the fact that there were four resorts

operating on the island. At this time, the Duluth companies continued to

supply transportation for tourists and shipments for the fishermen.

However, Booth's and Christiansen's soon shifted the price differentiation

in favor of the tourists. The two companies soon became competitive for

tourists and often tried to lower their ticket costs, compared to the other

company, to attract new customers. By 1950, the Duluth companies were

charging the few remaining Isle Royale fishermen a fixed monthly shipping

rate, regardless of how little weight they sent, while the tourists paid

variable ticket prices dependent on seasonal demand. As more tourists

traveled to the island, the fixed shipping rates for fishermen rose each

year. By the mid-1950's, fish prices had remained too low for too long and

the Lake Superior fish populations had declined significantly from the

introduction of the non-native smelt fish in the 1930's and parasitism of

the lamprey eel in the 1940's (Sivertson, p. 84, 1996). In addition, the

NPS began to enforce strict regulations on the types of natural resource

use that would be allowed on the island which included specific seasons for

traditional commercial fish and specific amounts of fish that could be

harvested. As preservation became a top priority for the NPS, the factor

ownership changed so that the fishermen's power to influence the use-rights

of the island's natural resources became less and less. The rules for

making rules supported the shift of factor ownership of resource use from

the traditional harvest of natural resources to the growing conservation of

natural resources. Samuels, et. al. point out that laws help shape

preferences, procedure, and habits, and in specifying ideals, can sometimes

effect behavior toward these ideals and toward other people (Samuels, et.

al., p. 97). These types of affects can be seen in the close of the

fishermen's lifestyle on Isle Royale. As the fishing families lost their

power to influence the use-rights on the island, the NPS treated them more

and more like intruders who needed to be driven out of the wilderness.

The above combined chain of events, plus the rules for making

rules, led to the permanent closure of the commercial fishing season for

lake trout in 1961 (Sivertson, p. 94, 1992). Without the lake trout, the

fishermen could not earn a profit from their fishing, thus the Duluth

companies could not earn a profit from the fishermen. The shift in

economies of scale, and the power struggle between the fishermen and the

tourists, was thus sealed in favor of the tourist industry as the freight

ships were finally converted to tourist ferries and most of the fishing

families quietly left Isle Royale as the NPS burned and bulldozed their

homesteads to make way for the preference shift to wilderness use of the

island's natural resources. Perhaps if the community of fishermen had been

bought out by one or two large owners, a fishing economy of scale could

have allowed many fishermen to continue their lifestyle, but as hired men.

A reflective glance at the economies of scale process presents an

interesting alternative outcome worth considering. The principle of

circular and cumulative causation could be applied to the increasing Isle

Royale tourist travel as the Booth's and Christiansen's companies used

their profits to further their business interests in the tourist industry.

The increase in tourist travel to the island caused ticket costs to fall

which created more demand for tourist travel and more pressure by tourists

to change factor ownership in their favor. In turn, this increased profits

for the fisheries enough so that they could have purchased another boat to

carry more passengers, thus increasing their profits for further

investments in the tourist business and increasing the attraction for other

companies to become involved as well (Schmid, chpt. 4, p. 4, 1987). If

this set of circumstances had come into fruition, the power struggle may

have leaned toward the tourist preferences much earlier in the century.

Section II:

National Park Service Wilderness Protection

In 1976, 98 percent of Isle Royale was officially declared

protected wilderness (Isle Royale National Park Draft General Management

Plan, p. 8). This institutional policy has constituted a great deal of

changes in factor ownership of the natural resource use. In the past three

years, the NPS has been attempting to decide whose preferences will count

most as a new long-term management plan is composed (Isle Royale National

Park Draft General Management Plan, p. ii). The plan will lay out the

types of resource use allowed in different areas of the Park and the role

of user fees for visiting the Park. Decisions, on whose preferences count,

must be made between the island's three user groups. Thus, we have the

ongoing power struggle to gain influential factor ownership of those user

rights. This struggle divides the interdependent members of the tourist

group into factions who cannot agree to compromise so they strive against

each other.

The three user groups consist of: people who come for a three hour

time slot (day users), people who spend their time hiking the trails and

camping (hikers), and people who spend most of their time in the Park's

water with their own private boats (boaters). Because the last two groups

regularly express their value for using the Park's resources, it is between

their preferences that often difficult choices must be made.

The boaters, who use the island frequently during the season and

for many seasons throughout their lives, are well organized in the three

states nearby. Through various marinas, yacht clubs, and fishing groups,

the boating community has a large and involved membership who frequently

express their concern on issues of Park management. The boaters are well

represented at public meetings and participate actively in writing comment

letters to Park officials. However, they are not the predominant user

group by numbers. The hikers compose the highest number of users, but they

do not have organized groups expressing their preferences. Reasons for

this include: that they may not use the Park more than once or twice in

their lifetime because it is expensive and difficult to get to the island;

many see their visit as an adventure to be conquered before moving on to

their next adventure; and it takes a significant number of days for hikers

to complete their visit. The hikers lack of representation results in a

lower level of influence than their numbers suggest. Thus, they are a

"latent group" in Mancur Olson's terminology--they are a large group where

one person's action cannot make a noticeable contribution to any group

effort to achieve the high exclusion cost result of factor ownership

because individual actions are not noticeable (Olson, p. 50).

Private boaters have been visiting Isle Royale for recreation and

fishing since the early days of commercial fishermen living on the island.

With the declaration of wilderness protection, these boaters lost many of

their traditional use-rights (i.e. many docks were removed, fires and grill

sites were restricted, and the fishing regulations became more strict).

However, hikers who enjoy the challenge of being self-reliant in primitive

areas gained new use-rights (fewer docks = fewer boat noises, dock funds

were used to create new hiking trails, and more campsites were established

inland). The situational problem to achieve factor ownership surfaced as

one of high exclusion costs.

The structural characteristics in this situation are that Isle

Royale is a National Park and it is open for anyone to use the resources as

long as they follow the NPS guidelines. Therefore, the boaters could not

stop the arrival of the wilderness seeking hikers. So, the performance

question became: who would have more use-rights, the boaters or the hikers?

In response to this implicit question, the boating community organized

itself to form a strong coalition that actively lobbies its concern or

support for NPS policies. Collective action, in this sense, is

instrumental in producing institutional changes and it will either modify

the existing institutional arrangements or it will be unsuccessful and the

status quo institutional structure will be upheld until new efforts come

forth(Bromley, p. 244). Many scholars have expressed doubts over the

effectiveness of large organized groups, but the boaters seem to succeed in

having their voice heard, possibly because of their historic "sense of

community" and the ensuing trust and cooperation among members (Hirschman,

p. 49). One can observe this when a boater helps another in distress whom

he has never met before and one can see it in the social atmosphere of a

dock filled with boaters sharing grills and fresh-caught fish.

Hikers, on the other hand, being more seekers of solitude in their

use of the island resources, do not have a sense of community away from the

island either. As the structural characteristics appear at present, the

boaters will be the most likely group to express greater influential power

in gaining more use-rights through the new long-term management plan. "The

problem of collective choice arises when the existing institutional

arrangements are found wanting in. . . recognition of new tastes and

preferences," i.e. when the hikers desire to look out on quiet waters free

of boats (Bromley, p. 245). In order for a performance change to occur in

the outcome of the management plan, the hikers must lobby in support of

gaining more use-rights. However, to do this, they would have to overcome

the high transaction costs of organizing.

Alternative structural variables for the high exclusion cost

situation include government administration whereby a tax on hiking boots

could support lobbying for more use-rights in protected wilderness areas.

Therefore, the people who enjoy the use of Isle Royale's wilderness

resources would be paying for the management of those resources, including

trails and other hiking amenities. However, this would involve unwilling

riders--those people who buy hiking boots for use in their ranch work or

those who only want hiking boots as a fashion statement. These people may

never visit a wilderness area, much less Isle Royale; it is unlikely that

they would support the tax.

Another structural alternative in the high exclusion cost situation

is used by the boaters. They have been using a donation status to support

their lobbying efforts and although they may have a few frustrated-would-be

riders who do not donate because they feel that too many non-donators will

benefit, their collective voice is heard clearly and frequently by the NPS.

>From a narrow economic viewpoint, this type of donation would seem

irrational because no one, even non-contributors, can be excluded from any

gained benefits. However, if this structure is compared to other programs

that also have a "community" of support whose members expect that everyone

will contribute what they can, i.e. public radio, then the contributions

are more easily understood (Schmid, ch. 3, p. 9, 1987). Because the

community of boaters share certain expectations of enjoying the use of Isle

Royale's resources and supporting the right to enjoy the use of those

resources (through donations, letter writing, or other efforts that

contribute to the success of their lobbying effort), their preferences and

habits are internalized and reinforced by the other members of their group.

In this way, their group efforts speak well of the strength of their

organization to impact the individual members' cognitive and behavioral

relations to the island by keeping the "planner self" in charge of their

preferences and habits--instead of their "lack of motivation self" or any

of the other "selfs" who might be less inclined to participate in the

lobbying effort because they can rationalize alternative ways for the

boaters to spend their time (Schmid, ch. 2, p. 103, course packet, 1998).

The administrative and donation strategies, though, are not the only

options appropriate for high exclusion cost situations. The NPS itself

charges a federally mandated user fee to visit Isle Royale and some of the

funds collected from that could be used to solicit public comments from

both groups. However, there are unwilling riders in this performance

outcome because people often feel that they have already paid to support

the Park through their taxes and they should not have to pay again. In

addition, there are unwilling riders whose taxes support the NPS but they

will never visit a National Park. Thus, these options do not seem to be in

the hikers' best interests for the goal of increasing their use-rights.

Perhaps a market structure alternative would best increase the power of

their influence on NPS policies.

If the hikers who have visited Isle Royale organized a market bid

where each of them paid $5 to support a lobbyist who would act as their

agent to the NPS, they would then have a collective and clear

representation of their concerns and support for NPS policies. In addition

to having the highest numbers of visitors in their group, this organized

lobby would give the hikers the upper hand they need to gain more

use-rights than the boaters.

Innovation in Free Rider Control

As stated earlier, in order for this latent group to organize

itself from across the U.S., it would need to overcome the high transaction

costs involved in the process. Included in these costs is the question of

how to overcome the individual hiker's cognitive and behavioral habit of

thinking of herself as separate from other hikers--relating back to the

hikers desire for solitude. To successfully lobby their preferences, the

hikers would need an incentive to place their "planner self" in charge of

their decisions relating to Isle Royale.

The performance question involved in the high transactions costs

would be: how many hikers will pay the $5? In addition, if the lobby were

successful, how could free-riders, both those who are unwittingly not

contributing and those who are intentionally not contributing, be

identified on the island and thereby persuaded to join the lobby effort or

"shamed" away from using the island? Olson suggests that a "selective

incentive" is needed in order to mobilize the latent group's potential for

successful group action (Olson, p. 50-51). Therefore, let us consider a

hypothetical situation.

A Testable Hypothesis: If an Isle Royale Park employee, who was

also a hiker, could convince a popular outfitter company to design a

high-quality Isle Royale-bandanna (which had easily identifiable

characteristics, maybe gray color, symbolic of the wolves) and the first

100 hikers to join the $5 per person lobbying effort would be given a free

bandanna, there would be a beginning incentive. After the publicity of

this beginning incentive, hikers who support Isle Royale would be inclined

to join the lobbying effort and receive their own useful and stylish Isle

Royale-bandanna. This initial effort may provide enough of a "sense of

community" among the first 100 members that they can begin to persuade

other hikers to put their "planner self" in charge and join the lobby

effort as well. The numbers of new members and total members could be

charted to determine whether the incentive is successful in increasing the

lobby group membership.

The bandanna incentive would have strong potential growth from the

beginning publicity because the bandannas would not need to be expensive

items to produce and they could be promoted by the idea that every hiker

has need of one--for wiping sweat off their brow, for tying loose backpack

straps tighter, or as an emergency bandage. In addition, it would not be

difficult for an off-duty Park employee to promote the bandanna lobbying

effort to other hikers on the trails--giving them phone numbers for

information, etc. After becoming supporting members of the Isle Royale

lobbying effort, these hikers are likely to visit the island more than just

once in their lives and some may become inclined to visit more than once in

a season. This "bandanna-group" could become easily recognizable on the

island which would bring more attention to their efforts. As unwitting

riders inquired about the bandannas, they would learn of the opportunity to

support the Isle Royale lobbying effort. In addition, as the

"bandanna-group" members questioned other Isle Royale hikers on why they

were not supporting the lobbying effort by wearing an Isle Royale-bandana,

intentional free-riders would soon be identified and potentially shamed.

Section III:

Predicted Conflict in Peak Use Demand

As the hikers' hypothetical lobbying effort influenced NPS

policies, producing institutional changes in favor of more use-rights for

hikers and fewer rights for boaters, the numbers of boaters using the

island resources would likely decline significantly. This combination of

greater opportunities for hikers and a decreasing presence of boaters would

likely bring a higher number of hikers to Isle Royale. If most of these

hikers were seeking a wilderness experience of solitude, they may

eventually find that their use of the island resources are in conflict with

their fellow hikers. One possibility of conflict among the hikers could

appear in the form of peak-load use. Campground facilities and other

visitor services are built around average demand levels and many are unused

during periods of low visitation/low demand. Visitor demand reaches

peak-load use around the middle of the summer season, roughly mid-July

through mid-August. These few weeks may see as many visitors as the rest

of the season combined. During this seasonal peak-use, there are often

shortages in facilities and services.

In the above situation, visitors to Isle Royale often have favorite

campgrounds where they prefer to stay. As a result, many of them have a

history of being overcrowded, especially during mid-summer. Therefore, the

NPS decides to add more campsites to a few of the most popular campgrounds.

This decision elicits two responses from--the now dominant user group--the

hikers. The lobbyist reports to the NPS that half of the hiking community

wants wooden shelters for all of the new sites while the other half of the

community wants traditional tent-sites only. This would pose a problem

because the NPS is attempting to promote more options for "wilderness"

experiences, therefore, the plan had been to add tent-sites only. In

addition, the NPS is looking at the costs saved in building tent-sites

versus shelters--supplies of wood and roofing material would have to be

transported to the island and larger areas around the campgrounds would

need to be site-prepared through brush clearing etc. The split preference

among the hikers stems from shortages during the seasonal peak-load demand

of mid-summer.

Most hikers prefer to have the option of choosing between a

tent-site or a wooden shelter when they stumble off the long trail into a

campground with both of these types. Tent-sites are perfect during sunny

days and clear-sky nights, while shelters are more ideal in cool, wet or

threatening weather. Therefore, when stormy weather is prevalent, there

are not enough shelters to house the high demand of hikers during the

mid-summer peak-load because the average demand supplies of facilities and

services is inelastic. If the campground shelter capacities are expanded

to meet the demand for peak-load seasonal use, especially during stormy

weather, there will be unused capacity at other times. The question

becomes: who will pay for this capacity?

Allan Schmid states that the implicit right involved in peak-load pricing

schemes is a factor in income distribution and patterns of use and facility investment (Schmid,

ch. 7, p. 4, 1987). A flat-rate charge means that people pay the same

regardless of their time of use. Therefore, the hikers who can only plan

their trips to Isle Royale during the peak-load use of mid-summer have no

options as to timing and would be willing to pay more than hikers who can

avoid mid-summer peak-use periods. Does this group of hikers have to help

pay for the unused capacity built for the peak-load use? Or do they have

the right to a lower fee when some of the surplus of the mid-summer

peak-load users is collected? These are questions that will need

consideration, along with other factors, when the NPS seeks its decision.

The addition of new tent-sites would not require as many

work-hours in constructing nor in maintenance throughout the season, in

comparison to the wooden shelters. But the NPS is willing to consider

adding the shelters if there is enough support among the hikers to pay for

the extra costs involved in building and maintaining them--this includes

additional Rangers to collect the higher mid-season fees at certain

campgrounds and the additional maintenance required for shelters even

during off-peak low demand times. However, when the NPS asks whether

hikers would be willing to pay an extra fee at specific campgrounds for use

of the shelters during mid-summer peak-load weeks, most hikers would prefer

to forgo the luxury of the option.

Since the institutional structure (the NPS) controls who gets to

choose the type of campsites to be built, these questions now arise: whose

use preference counts more and how will the costs be shared? The peak-load

situation is an example of the general case of increasing cost to scale

which raises interdependence and the necessity for public choice to decide

who is the marginal user who must pay the higher marginal cost (Schmid,

ch. 7, p. 4, 1987). If the shelters are built, a new user fee will be

charged at those campgrounds during mid-summer peak-load use in order to

help pay for the extra costs of the shelters. Those hikers who prefer

tent-sites and are locked into trips during the weeks of peak-load use will

find this unacceptable because their preference was pre-empted.

Hypothesis: The performance outcome of institutional change in

this situation would require the NPS to make a decision between the two

factions of the hikers group. This decision would cause a split in the

organization because one half of the group would have to pay a fee that

they did not support or avoid certain campgrounds during mid-summer at a

possibly high cost of inconvenience. The split in the organization could

produce a significant loss of former membership and weaken the hikers lobby

effort, thus improving the chances of another shift in the power struggle

for influence; the boaters could regain more of their preferred use-rights

on the island.

Conclusion

Throughout the history of Isle Royale, there have been

interdependency conflicts between users of the island's natural resources.

Within these conflicts, the question of "whose preferences count?" has been

a dominant issue in the power struggles over shifts in factor ownership.

Structural alternatives have provided opportunities for different groups to

dominate the use of the natural resources at different points in time and

this struggle will likely continue as long as people are interested in

going to Isle Royale. This analysis has traced a few of the most recent

user groups and the impacts of their abilities to influence the use of Isle

Royale's natural resources in favor of their preferences. From the

economies of scale and path dependence in the early community of fishermen

to the possible performance outcome among hikers in a situation of

peak-load use, the evolution of the island's institutional structures has

and will continue to shift according to which user group can bring their

preferences to dominate. In addition, all of these factors are impacted by

the rules for making rules. Therefore, the question of: "Whose preferences

count in the use of Isle Royale's natural resources?" is more of a process

than a single question (Samuels, p. 1561).

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Schmid, A.A. 1998. Institutional and Behavioral Economics--work in progress.

Sivertson, A. 1992. Once Upon an Isle: The Story of Fishing Families on

Isle Royale. Wisconsin Folk Museum. Mount Herob.

Sivertson, A. 1996. Tales of the Old North Shore. Lake Superior Port

Cities, Inc. Duluth.

Notes:

1 This examination looks at only a few specific components from the history

of natural resource use on Isle Royale; some details may not be exact in

historical context but are used to analyze the trends of shifting

influences involved in the power struggle over who controls factor

ownership of the island's natural resources.

Appendix: Table 1

Situation

*use of island

natural resources

1. IUG:

A. conflict between fishermen and tourist

B. between boaters

and hikers

2. Economies of Scale:

boats: carry fish or

tourists; the more

tourists,the cheaper

the cost per tourist--same for fish but the number of fish is limited

-Circular & Cumulative Causation

3. HEC:

-more user rights for

hikers, or boaters

via lobbying

4. Transaction cost:

A. how many organized hikers influence the rules for using National Park

resources?

5. Peak-load: among hikers

A. quantity of good: number of campsites

B. quantity of use: often over crowded during mid-summer

C. quality of good: some want shelters, some just more tent sites and one

tends to pre-empt the other

Structure

A. rules for making rules

1. Michigan DNR-fishing licenses

2. NPS policy-strict fishing limitations

B. factor ownership: via

public use rights

A. individual choice at margin

B. early collective action by fishermen

A. Adm: taxes on boots;

user fee to support lobbying

B. Status: donations

C. Mkt: hikers each pay $5 for a lobbyist

A. rules for making rules--e.g. how Congress makes appropriations to NPS;

or NPS policies

A. alternative rules for who chooses quality and pricing

B. cost-sharing: higher use fees

1. same price for all

2. different prices for different weeks of the season

Performance

A. institutional change

1. no limits

2. limits placed on total fish catch and seasons of catch

B. who gets to use the

resources?

(hikers vs. boaters)

A. path dependence--tourists increase

B. fishermen win; path A. never gets started

A. unwilling riders: who may never visit National Parks; visitors who feel

unjustly charged

B. frustrated-would-be-rider

C. how many hikers will pay? if lobby is successful free-riders will

benefit despite low participation

C. frustrated-would-be-rider

A. institutional change:

hikers have more user rights or

B. boaters have more user rights

A. high pre-emption

B. who pays fixed cost for more campsites, who pays variable cost for

shelters?