The tradeoff of the commons
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.
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- 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 765-90, October.
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- Surajeet Chakravarty & Todd R. Kaplan & Gareth Myles, 2010.
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- H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124.
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