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Private Property and Economic Efficiency: A Study of a Common-Pool Resource

Listed author(s):
  • Grafton, R Quentin
  • Squires, Dale
  • Fox, Kevin J

The British Columbia halibut fishery provides a natural experiment of the effects of "privatizing the commons." Using firm-level data from the fishery 2 years before private harvesting rights were introduced, the year they were implemented, and 3 years afterward, a stochastic frontier is estimated to test for changes in technical, allocative, and economic efficiency. The study indicates that (1) the short-run efficiency gains from privatization may take several years to materialize and can be compromised by restrictions on transferability, duration, and divisibility of the property right; (2) substantial long-run gains in efficiency can be jeopardized by preexisting regulations and the bundling of the property right to the capital stock; and (3) the gains from privatization are not just in terms of cost efficiency but include important benefits in revenue and product form. Copyright 2000 by the University of Chicago.

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File URL: http://dx.doi.org/10.1086/467469
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Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 43 (2000)
Issue (Month): 2 (October)
Pages: 679-713

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Handle: RePEc:ucp:jlawec:v:43:y:2000:i:2:p:679-713
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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  1. Richard Schmalensee & Paul L. Joskow & A. Denny Ellerman & Juan Pablo Montero & Elizabeth M. Bailey, 1998. "An Interim Evaluation of Sulfur Dioxide Emissions Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 53-68, Summer.
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  6. Joskow, Paul L & Schmalensee, Richard, 1998. "The Political Economy of Market-Based Environmental Policy: The U.S. Acid Rain Program," Journal of Law and Economics, University of Chicago Press, vol. 41(1), pages 37-83, April.
  7. Rucker, Randal R & Thurman, Walter N & Sumner, Daniel A, 1995. "Restricting the Market for Quota: An Analysis of Tobacco Production Rights with Corroboration from Congressional Testimony," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 142-175, February.
  8. Timothy G. Taylor & H. Evan Drummond & Aloisio T. Gomes, 1986. "Agricultural Credit Programs and Production Efficiency: An Analysis of Traditional Farming in Southeastern Minas Gerais, Brazil," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 110-119.
  9. James E. Kirkley & Dale Squires & Ivar E. Strand, 1995. "Assessing Technical Efficiency in Commercial Fisheries: The Mid-Atlantic Sea Scallop Fishery," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 686-697.
  10. R. Quentin Grafton & Dale Squires & James E. Kirkley, 1996. "Private Property Rights And Crises In World Fisheries: Turning The Tide?," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 90-99, October.
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  13. Kumbhakar, Subal C., 1987. "The specification of technical and allocative inefficiency in stochastic production and profit frontiers," Journal of Econometrics, Elsevier, vol. 34(3), pages 335-348, March.
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  15. Mark Herrmann, 1996. "Estimating the Induced Price Increase for Canadian Pacific Halibut with the Introduction of the Individual Vessel Quota Program," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(2), pages 151-164, 07.
  16. Boris E. Bravo-Ureta & Laszlo Rieger, 1991. "Dairy Farm Efficiency Measurement Using Stochastic Frontiers and Neoclassical Duality," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 421-428.
  17. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
  18. De Alessi, Louis, 1983. "Property Rights, Transaction Costs, and X-Efficiency: An Essay in Economic Theory," American Economic Review, American Economic Association, vol. 73(1), pages 64-81, March.
  19. Rose Anne Devlin & R. Quentin Grafton, 1998. "Economic Rights and Environmental Wrongs," Books, Edward Elgar Publishing, number 1119.
  20. Grafton R. Quentin, 1995. "Rent Capture in a Rights-Based Fishery," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 48-67, January.
  21. Kumbhakar, Subal C., 1997. "Modeling allocative inefficiency in a translog cost function and cost share equations: An exact relationship," Journal of Econometrics, Elsevier, vol. 76(1-2), pages 351-356.
  22. Agnello, Richard J & Donnelley, Lawrence P, 1975. "Property Rights and Efficiency in the Oyster Industry," Journal of Law and Economics, University of Chicago Press, vol. 18(2), pages 521-533, October.
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