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Welfare Trade-offs between Transferable and Non-Transferable Lotteries

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  • Ohler, Adrienne
  • Chouinard, Hayley H.
  • Yoder, Jonathan K.

Abstract

The Four Rivers lottery run by the National Forest Service distributes the opportunity to raft four sections of rivers in Idaho through a non-transferable lottery. The restriction of trade and focus on equity in distribution creates a deadweight loss in total surplus compared with a market or auction system. If the NFS allowed the transferring of permits, then there exists a potential for rafters to gain surplus in trade. However, non-rafters have an incentive to enter the transferable lottery to make a profit from trade. Using the NFS lottery as a guide, this paper examines welfare under the two lottery system to understand how changes in transferability affect the welfare of users and non-users, and the revenues of the government. Since variables, such as number of permits, permit fees, and application fees, also impact welfare, we derive comparative statics for these variables to demonstrate how these government controls affect rafter welfare, non-rafter welfare, and government revenue differently under transferable and non-transferable lotteries. Our results show the welfare trade-offs rafters have between transferable and non-transferable lotteries.

Suggested Citation

  • Ohler, Adrienne & Chouinard, Hayley H. & Yoder, Jonathan K., 2007. "Welfare Trade-offs between Transferable and Non-Transferable Lotteries," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 7363, Western Agricultural Economics Association.
  • Handle: RePEc:ags:waeapo:7363
    DOI: 10.22004/ag.econ.7363
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    References listed on IDEAS

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    Cited by:

    1. Nicholas Ryan & Anant Sudarshan, 2020. "Rationing the Commons," Working Papers 2020-93, Becker Friedman Institute for Research In Economics.
    2. Nicholas Ryan & Anant Sudarshan, 2020. "Rationing the Commons," Cowles Foundation Discussion Papers 2239, Cowles Foundation for Research in Economics, Yale University.
    3. Nicholas Ryan & Anant Sudarshan, 2020. "Rationing the Commons," NBER Working Papers 27473, National Bureau of Economic Research, Inc.

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