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Rationing the Commons

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  • Nicholas Ryan
  • Anant Sudarshan

Abstract

Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average. The rationing regime is still grossly inefficient, because it misallocates water across farmers, lowering productivity. Pigouvian reform would increase agricultural surplus by 12% of household income yet fall well short of a Pareto improvement over rationing.

Suggested Citation

  • Nicholas Ryan & Anant Sudarshan, 2022. "Rationing the Commons," Journal of Political Economy, University of Chicago Press, vol. 130(1), pages 210-257.
  • Handle: RePEc:ucp:jpolec:doi:10.1086/717045
    DOI: 10.1086/717045
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    Cited by:

    1. Ujjayant Chakravorty & Ridhima Gupta & Martino Pelli, 2022. "The economics of rural energy use in developing countries," CIRANO Working Papers 2022s-12, CIRANO.
    2. Soumya Balasubramanya & Nicholas Brozović & Ram Fishman & Sharachchandra Lele & Jinxia Wang, 2022. "Managing irrigation under increasing water scarcity," Agricultural Economics, International Association of Agricultural Economists, vol. 53(6), pages 976-984, November.
    3. Fishman, Ram & Giné, Xavier & Jacoby, Hanan G., 2023. "Efficient irrigation and water conservation: Evidence from South India," Journal of Development Economics, Elsevier, vol. 162(C).

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