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On the Dual Nature of Weak Property Rights

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Author Info

  • Louis Hotte

    () (Department of Economics, University of Ottawa, Ottawa, ON)

  • Randy McFerrin

    () (New Mexico State University, U.S.A.)

  • Douglas Wills

    () (University of Washington)

Abstract

In the natural resource literature, convertional wisdom holds that weak property rights will cause a resource to be over-exploited. This is because weak property rights are typically perceived as a problem of input exclusion. In this paper, we first present evidence to the effect that weak property rights often take the form of contestable output- or output theft - and that this has an impact or resource use. We then propose a theoretical model of natural resource use under generally weak prperty rights - or weak state presence - when resource users face the dual problem of input exclusion output appropriation. We show that introducing the possibility that outputs can be contested acts as an output tax, with the added twist that resource users effectively determine the level of the tax. This tax has a depressive effect on input use. As a result, whether the resource is under-or over-exploited in equilibrium will depend on the relative severity of output appropriation and input exclusion problems when property rights are generally weak.

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Bibliographic Info

Paper provided by University of Ottawa, Department of Economics in its series Working Papers with number 1103E.

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Length: 31 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:ott:wpaper:1103e

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Related research

Keywords: Natural Resources; Property Rights; Trespass; Theft; Over-Exploitation; Under-Exploitation;

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References

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  1. Louis Hotte, 2005. "Natural-resource exploitation with costly enforcement of property rights," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 497-521, July.
  2. Fafchamps, Marcel & Minten, Bart, 2006. "Crime, Transitory Poverty, and Isolation: Evidence from Madagascar," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 579-603, April.
  3. Gaudet, Gerard & Moreaux, Michel & Salant, Stephen W., 2002. "Private Storage of Common Property," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 280-302, March.
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Blog mentions

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  1. Property rights and natural resources
    by Economic Logician in Economic Logic on 2011-06-24 14:35:00

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