IDEAS home Printed from https://ideas.repec.org/p/sdk/wpaper/19.html
   My bibliography  Save this paper

Prices versus Quantities for Common Pool Resources

Author

Listed:
  • Frank Jensen

    () (Institute of Local Government Studies, Denmark)

Abstract

In Weitzman (1974) the choice between price and quantity regulation under imperfect information is analysed. It is shown that the choice between the two regulatory instruments depends on the sign of the sum of the curvatures of the cost and benefit functions. If the marginal benefit function is steep and the marginal cost function is flat quantity regulation is preferred over price regulation, while price regulation is preferred over quantity regulation if the marginal benefit function is flat and the marginal cost function is steep. The results in Weitzman (1974) are sometimes quoted in studies of fisheries management. In this paper an analysis of conditions for generalising the Weitzman result to fisheries economics is presented. It is shown that the result can be generalised if the cost function is additively separable in stock size and catches. This leads to the conclusion that the results hold for a schooling fishery. However, for a search fishery the condition that the cost function must be additively separable is seldom fulfilled and quotation of the classical article is therefore not reasonable. A further result is that for a schooling fishery, taxes are likely to be preferred over individual transferable quotas in the case where there is imperfect information about costs. The reason is that the marginal cost function is likely to be steeper than the demand function. In the light of this result, the fact that individual quotas regulate over 55 fisheries while taxes regulate none is surprising.

Suggested Citation

  • Frank Jensen, 2001. "Prices versus Quantities for Common Pool Resources," Working Papers 19/01, University of Southern Denmark, Department of Sociology, Environmental and Business Economics.
  • Handle: RePEc:sdk:wpaper:19
    as

    Download full text from publisher

    File URL: http://www.sdu.dk/~/media/Files/Om_SDU/Institutter/Miljo/ime/wp/Jensen19.ashx
    File Function: First version, 2001-04
    Download Restriction: no

    References listed on IDEAS

    as
    1. N. J. Ireland, 1977. "Ideal Prices vs. Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 183-186.
    2. Andersen, Peder, 1982. "Commercial fisheries under price uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 9(1), pages 11-28, March.
    3. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, March.
    4. Newell, Richard G. & Pizer, William A., 2003. "Regulating stock externalities under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 416-432, March.
    5. Hoel, Michael & Karp, Larry, 2002. "Taxes versus quotas for a stock pollutant," Resource and Energy Economics, Elsevier, vol. 24(4), pages 367-384, November.
    6. Neher,Philip A., 1990. "Natural Resource Economics," Cambridge Books, Cambridge University Press, number 9780521311748, May.
    7. Parzival Copes, 1986. "A Critical Review of the Individual Quota as a Device in Fisheries Management," Land Economics, University of Wisconsin Press, vol. 62(3), pages 278-291.
    8. Ragnar Arnason, 1990. "Minimum Information Management in Fisheries," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 630-653, August.
    9. Wilen, James E., 2000. "Renewable Resource Economists and Policy: What Differences Have We Made?," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 306-327, May.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sdk:wpaper:19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ulla H. Oehlenschläger). General contact details of provider: http://edirc.repec.org/data/iehhsdk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.