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Does the Allocation of Property Rights Matter in the Commons?

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  • Andreas Leibbrandt
  • John Lynham

Abstract

A popular solution to the Tragedy of the Commons is to create private property rights to access the commons. If resource users care about equity, they may be unwilling to respect property rights regimes that lead to less equitable outcomes. We explore in a series of laboratory experiments whether it is possible to undermine the efficiency of property rights solutions through the allocation process. We find that both the extent to which property rights are enforced and how they are allocated significantly affect extraction and compliance. Our findings suggest that one of the most popular allocation methods is suboptimal: we observe that occasional enforcement and the grandfathering of property rights is dominated by no enforcement and the equal allocation or inverse grandfathering of property rights. Our results challenge the view that equity is irrelevant for property rights solutions to the commons problem.

Suggested Citation

  • Andreas Leibbrandt & John Lynham, 2017. "Does the Allocation of Property Rights Matter in the Commons?," Monash Economics Working Papers 04-17, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2017-04
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    More about this item

    Keywords

    tragedy of the commons; privatization; grandfathering; equity; social norms;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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