Annual Review of Resource Economics
Economics of Tipping Points
2026-07-21
We provide a critical appraisal of the literature related to the economics of tipping points and regime shifts. Simple modeling examples of pollution control and resource harvesting illustrate the key aspects of the economics of tipping points and regime shifts. We show how economic management should be modified to consider tipping points in deterministic and stochastic settings and how they influence common pool resources and public good provision. This review also presents relevant behavioral experimental designs for tipping point experiments and discusses further in what ways models and empirical work could better speak to each other in future research.