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Private Property and Economic Efficiency: A Study of a Common-Pool Resource

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  • Grafton, R Quentin
  • Squires, Dale
  • Fox, Kevin J

Abstract

The British Columbia halibut fishery provides a natural experiment of the effects of "privatizing the commons." Using firm-level data from the fishery 2 years before private harvesting rights were introduced, the year they were implemented, and 3 years afterward, a stochastic frontier is estimated to test for changes in technical, allocative, and economic efficiency. The study indicates that (1) the short-run efficiency gains from privatization may take several years to materialize and can be compromised by restrictions on transferability, duration, and divisibility of the property right; (2) substantial long-run gains in efficiency can be jeopardized by preexisting regulations and the bundling of the property right to the capital stock; and (3) the gains from privatization are not just in terms of cost efficiency but include important benefits in revenue and product form. Copyright 2000 by the University of Chicago.

Suggested Citation

  • Grafton, R Quentin & Squires, Dale & Fox, Kevin J, 2000. "Private Property and Economic Efficiency: A Study of a Common-Pool Resource," Journal of Law and Economics, University of Chicago Press, vol. 43(2), pages 679-713, October.
    • Handle: RePEc:ucp:jlawec:v:43:y:2000:i:2:p:679-713
    DOI: 10.1086/467469
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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q22 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Fishery

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