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Unitization of Spatially Connected Renewable Resources

  • Kaffine Daniel T


    (Colorado School of Mines)

  • Costello Christopher


    (University of California, Santa Barbara)

Spatial connectivity of renewable resources induces a spatial externality in extraction. We explore the consequences of decentralized spatial property rights in the presence of spatial externalities. We generalize the notion of unitization—developed to enhance cooperative extraction of oil and gas fields—and apply it to renewable resources which face a similar spatial commons problem. We find that unitizing a common pool renewable resource can yield first-best outcomes even when participation is voluntary, provided profit sharing rules can vary by participant.

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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 11 (2011)
Issue (Month): 1 (March)
Pages: 1-31

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Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:15
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  1. Heintzelman, Martin D. & Salant, Stephen W. & Schott, Stephan, 2009. "Putting free-riding to work: A Partnership Solution to the common-property problem," Journal of Environmental Economics and Management, Elsevier, vol. 57(3), pages 309-320, May.
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  4. Brown, Gardner & Roughgarden, Jonathan, 1997. "A metapopulation model with private property and a common pool," Ecological Economics, Elsevier, vol. 22(1), pages 65-71, July.
  5. Sanchirico, James & Wilen, James, 2000. "The Impacts of Marine Reserves on Limited-Entry Fisheries," Discussion Papers dp-00-34, Resources For the Future.
  6. Libecap, Gary D & Wiggins, Steven N, 1984. "Contractual Responses to the Common Pool: Prorationing of Crude Oil Production," American Economic Review, American Economic Association, vol. 74(1), pages 87-98, March.
  7. Libecap, Gary D & Wiggins, Steven N, 1985. "The Influence of Private Contractual Failure on Regulation: The Case of Oil Field Unitization," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 690-714, August.
  8. David Levhari & Leonard J. Mirman, 1980. "The Great Fish War: An Example Using a Dynamic Cournot-Nash Solution," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 322-334, Spring.
  9. Sanchirico, James N. & Wilen, James E., 2005. "Optimal spatial management of renewable resources: matching policy scope to ecosystem scale," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 23-46, July.
  10. Sanchirico, James N. & Wilen, James E., 1999. "Bioeconomics of Spatial Exploitation in a Patchy Environment," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 129-150, March.
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