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The Tradeoff of the Commons

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  • McAfee, R. Preston
  • Miller, ALan

Abstract

We develop a model of scarce, renewable resources to study the commons problem. We show that, contrary to conventional wisdom, property rights can often be less efficient than a commons. In particular, we study two effects: (1) waste which arises when individuals expend resources to use a resource unavailable due to congestion and (2) the risk of underutilization of the resource. We provide necessary and sufficient conditions for each effect to dominate the other when the cost of determining the availability of a resource is low.

Suggested Citation

  • McAfee, R. Preston & Miller, ALan, 2010. "The Tradeoff of the Commons," MPRA Paper 26423, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:26423
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    References listed on IDEAS

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    1. Mark Bagnoli & Ted Bergstrom, 2006. "Log-concave probability and its applications," Studies in Economic Theory, in: Charalambos D. Aliprantis & Rosa L. Matzkin & Daniel L. McFadden & James C. Moore & Nicholas C. Yann (ed.), Rationality and Equilibrium, pages 217-241, Springer.
    2. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    3. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Palgrave Macmillan Books, in: Chennat Gopalakrishnan (ed.), Classic Papers in Natural Resource Economics, chapter 9, pages 178-203, Palgrave Macmillan.
    4. Chander, Parkash & Leruth, Luc, 1989. "The optimal product mix for a monopolist in the presence of congestion effects : A model and some results," International Journal of Industrial Organization, Elsevier, vol. 7(4), pages 437-449, December.
    5. Roth, Alvin E & Xing, Xiaolin, 1994. "Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions," American Economic Review, American Economic Association, vol. 84(4), pages 992-1044, September.
    6. Chakravarty, Surajeet & Kaplan, Todd R & Myles, Gareth, 2010. "The Benefits of Costly Voting," MPRA Paper 21372, University Library of Munich, Germany.
    7. Barro, Robert J & Romer, Paul M, 1987. "Ski-Lift Pricing, with Applications to Labor and Other," American Economic Review, American Economic Association, vol. 77(5), pages 875-890, December.
    8. Hazlett, Thomas W, 1998. "Spectrum Flash Dance: Eli Noam's Proposal for "Open Access" to Radio Waves," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 805-820, October.
    9. Anthony Scott, 1955. "The Fishery: The Objectives of Sole Ownership," Journal of Political Economy, University of Chicago Press, vol. 63(2), pages 116-116.
    10. Noam, Eli, 1998. "Spectrum Auctions: Yesterday's Heresy, Today's Orthodoxy, Tomorrow's Anachronism. Taking the Next Step to Open Spectrum Access," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 765-790, October.
    11. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62(2), pages 124-124.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Property rights and the tragedy of the commons
      by Economic Logician in Economic Logic on 2010-12-15 21:19:00

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    Cited by:

    1. Cao, Xiaoyong & Gong, Jiong, 2017. "The tradeoff of the commons under stochastic use," Journal of Public Economics, Elsevier, vol. 145(C), pages 150-161.
    2. Chakravarty, Surajeet & Kaplan, Todd R. & Myles, Gareth, 2018. "When costly voting is beneficial," Journal of Public Economics, Elsevier, vol. 167(C), pages 33-42.
    3. Chakravarty, Surajeet & Kaplan, Todd R., 2013. "Optimal allocation without transfer payments," Games and Economic Behavior, Elsevier, vol. 77(1), pages 1-20.

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    More about this item

    Keywords

    Tragedy of the Commons; Spectrum; Open Access; Appointments; Property Rights; Reservations;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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