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When is increasing consumption of common property optimal? Sorting, congestion and entry in the commons

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  • Hughes, Jonathan E.
  • Kaffine, Daniel

Abstract

First-best pricing or assignment of property rights for rival and non-excludable goods is often infeasible. In a setting where the social planner cannot limit total use, we show that common-property resources can be over or under-consumed. This depends on whether the external benefits of reallocating users to less congested resources outweigh the additional costs imposed by new entrants. Importantly, we show that it may be optimal to encourage consumption of some common property resources. Our results have important implications for settings ranging from fisheries and forestry to recreational demand and transportation.

Suggested Citation

  • Hughes, Jonathan E. & Kaffine, Daniel, 2017. "When is increasing consumption of common property optimal? Sorting, congestion and entry in the commons," Journal of Environmental Economics and Management, Elsevier, vol. 81(C), pages 227-242.
    • Handle: RePEc:eee:jeeman:v:81:y:2017:i:c:p:227-242
    DOI: 10.1016/j.jeem.2016.05.003
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    References listed on IDEAS

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    Cited by:

    1. Alberto Ansuategi & Duncan Knowler & Tobias Schwoerer & Salvador García-Martínez, 2019. "Local Fishing Communities and Nature-Based Tourism in Baja, México: An Inter-sectoral Valuation of Environmental Inputs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 33-52, September.
    2. Jonathan E. Hughes & Daniel Kaffine, 2019. "When Should Drivers Be Encouraged To Carpool In Hov Lanes?," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 667-684, January.

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    More about this item

    Keywords

    Common property resources; Congestion externalities; Tragedy of the commons;
    All these keywords.

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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