We model and evaluate prosocial management of a parasite in a food production system. With contagion effects a food production system can be modelled as a production network with parasites as a bad intermediate input. We highlight the important difference between the physical and economic production network when regulating the system. Well defined property rights aligns the two networks, generating prosocial behavior eliminating the external diseconomy due to cross-site parasite contagion, and moves the system closer to the social optimum.
Empirically we test and verify the relevance of prosocial behavior by comparing parasite treatment and outcomes for independently owned and common owned production sites in Norwegian salmon aquaculture.
We show that common owned production sites demonstrate consistently lower spatial clustering of parasites, and significantly higher spatial coordination of treatment. Furthermore, we document a positive relationship between the geographic density of independently owned sites and the extent of parasites at site level. This density relationship is not present for common owned sites. We use seaport access as an instrument variable to identify excess clustering of independently owned sites and quantify the resulting causal effect of site density on parasites in the system.
Our results provide evidence for pro-social management of salmon lice among common owned sites suggesting that siting policies should distinguish between common owned and independently owned sites.