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Interest group incentives for post-lottery trade restrictions

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  • Adrienne Ohler
  • Hayley Chouinard
  • Jonathan Yoder

Abstract

The rights to use publicly-managed natural resources are sometimes distributed by lottery, and typically these rights are nontransferable. Prohibition of post-lottery permit transfers discourages applicants from entering the lottery solely for profitable permit sale, so only those who personally value the use of the resource apply. However, because permits are distributed randomly and trade is restricted, permits may not be used by those who value them most. We argue that restrictions on permit transfers is a policy response designed to limit entry when interest group membership is not distinguishable ex ante, and characterize the economic/informational conditions under which post-lottery prohibitions on trade are likely to arise. We develop our model using the specific case of the Four Rivers Lottery used to allocate rafting permits on four river sections in Idaho. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Adrienne Ohler & Hayley Chouinard & Jonathan Yoder, 2014. "Interest group incentives for post-lottery trade restrictions," Journal of Regulatory Economics, Springer, vol. 45(3), pages 281-304, June.
    • Handle: RePEc:kap:regeco:v:45:y:2014:i:3:p:281-304
    DOI: 10.1007/s11149-014-9246-y
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    More about this item

    Keywords

    Lottery; Interest groups; Tradable permits; Welfare analysis; D45; D61;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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