Rights-based institutions have been adopted for certain natural resources in order to more effectively mitigate the losses of the common pool. Past central government regulation has not proved satisfactory. A major issue has been the assignment of those rights. In this paper, I examine three different allocation rules: first-possession, lottery or uniform allocation, and auction and draw predictions as to when they might be adopted. I analyze the assignment, timing, and nature of the rights granted in five resources: oil and gas unit shares, water rights, radio spectrum rights, emission permits, and fishery ITQs. I find that rights-based arrangements generally are adopted late, but when they are implemented, first-possession rules dominate where there are incumbent users. Lotteries and auctions are rarely used. I discuss criticisms of first-possession rules and argue that first-possession is likely more efficient than previously recognized. Accordingly, restrictions on ITQs (rights set-asides for particular groups and exchange limitations) may be costly in the long run for maximizing the value of the fishery resource.
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Alberto Alesina & George-Marios Angeletos, 2005.
"Fairness and Redistribution,"
American Economic Review,
American Economic Association, vol. 95(4), pages 960-980, September.
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