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Resource Rights and Markets in a General Equilibrium Model of Production

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  • Henry Thompson

Abstract

Rights to a free resource lead to distributional deadweight losses in partial equilibrium. The present paper examines related distortions in a general equilibrium model of production with output prices constant for the small open economy. The free resource can result in lower output than a market with weak substitution in the other sector. The free resource also leads to a convex production frontier implying a price increase lowers output in the sector. Regarding policy, an import tariff, export subsidy, or price support would lower sector output. These general equilibrium distortions increase the incentives to favor resource markets over rights. Copyright Springer Science+Business Media Dordrecht 2013

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  • Henry Thompson, 2013. "Resource Rights and Markets in a General Equilibrium Model of Production," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(1), pages 131-139, September.
    • Handle: RePEc:kap:enreec:v:56:y:2013:i:1:p:131-139
    DOI: 10.1007/s10640-013-9656-9
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    References listed on IDEAS

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    1. Harry G. Johnson & Peter Mieszkowski, 1970. "The Effects of Unionization on the Distribution of Income: A General Equilibrium Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(4), pages 539-561.
    2. Henry Thompson, 2010. "The Stolper-Samuelson Box," Chapters, in: Mark Blaug & Peter Lloyd (ed.), Famous Figures and Diagrams in Economics, chapter 40, Edward Elgar Publishing.
    3. Bhagwati, Jagdish N. & Srinivasan, T. N., 1971. "The theory of wage differentials: Production response and factor price equalisation," Journal of International Economics, Elsevier, vol. 1(1), pages 19-35, February.
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    5. Stephen P. Magee, 1971. "Factor Market Distortions, Production, Distribution, and the Pure Theory of International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 85(4), pages 623-643.
    6. Ben Groom & Tim Swanson, 2003. "Missing Markets and Redundant Reservoirs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 125-144, September.
    7. Deacon, Robert T, 1994. "Incomplete Ownership, Rent Dissipation, and the Return to Related Investments," Economic Inquiry, Western Economic Association International, vol. 32(4), pages 655-683, October.
    8. David Zilberman & Neal Macdougall & Farhed Shah, 1994. "Changes In Water Allocation Mechanisms For California Agriculture," Contemporary Economic Policy, Western Economic Association International, vol. 12(1), pages 122-133, January.
    9. Jones, Ronald W, 1971. "Distortions in Factor Markets and the General Equilibrium Model of Production," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 437-459, May-June.
    10. Burness, H Stuart & Quirk, James P, 1979. "Appropriative Water Rights and the Efficient Allocation of Resources," American Economic Review, American Economic Association, vol. 69(1), pages 25-37, March.
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    12. Jones, Ronald W. & Easton, Stephen T., 1983. "Factor intensities and factor substitution in general equilibrium," Journal of International Economics, Elsevier, vol. 15(1-2), pages 65-99, August.
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    14. Anderson, Terry L & Johnson, Ronald N, 1986. "The Problem of Instream Flows," Economic Inquiry, Western Economic Association International, vol. 24(4), pages 535-554, October.
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    Cited by:

    1. José-María Da-Rocha & Jaume Sempere, 2017. "ITQs, Firm Dynamics and Wealth Distribution: Does Full Tradability Increase Inequality?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 249-273, October.

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    More about this item

    Keywords

    Free resource; Water rights; General equilibrium; Q20; Q30; D50;
    All these keywords.

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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