Free Access to the Commons: Random Priority versus Average Cost
AbstractA technology with increasing marginal costs produces indivisible units of service. Each agent wants at most one unit of service. We compare two natural mechanisms where users have free access to the technology. In one mechanism, Average Cost, each user pays the same average cost, in the other, Random Priority, users are randomly ordered (without bias) and successively offered to buy at the true marginal cost. Both mechanisms, AC and RP, lead to inefficient overproductions. Which one leads to a less severe tragedy ? We show that RP tends to overproduce less but that which game collects more social surplus depends much on the configuration of the demand (namely the social value of the goods produced). We give general results as well as canonical examples, describing demand and cost profiles for which one mechanism outperforms the other. We find that the key element for the comparison is the crowding ratio, i.e., the number of potential users over the number of units of output users can afford: (1) we prove that the more crowded the commons, the more RP outperforms AC, and (2) we exhibit a threshold value of 2.4 for the crowding ratio beyond which RP strongly outperforms AC, and beneath which AC only mildly outperforms RP. Thus the Random Priority mechanism offers a (partial) probabilistic resolution of the tragedy of crowded commons.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by HEC Paris in its series Les Cahiers de Recherche with number 662.
Length: 65 pages
Date of creation: 02 Nov 1998
Date of revision:
tragedy of the commons; increasing marginal cost; scheduling; cooperative production; priority;
Find related papers by JEL classification:
- D60 - Microeconomics - - Welfare Economics - - - General
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sandra Dupouy).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.