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Interst Group Incentives for Post-lottery Trade Restrictions

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


    (School of Economic Sciences, Washington State University)

The rights to use publicly-managed natural resources are sometimes distributed by lottery,and typically these rights are non-transferable. Prohibition of post-lottery permit transfers discourages applicants from entering the lottery solely for pro table permit sale, so only those who personally value the use of the resource apply. However, because permits are distributed randomly and trade is restricted, permits may not be used by those who value them most. We examine a possible rationale for restrictions on permit transfers based on the distribution of welfare across interest groups, and characterize the economic conditions under which post-lottery prohibitions on trade are likely to arise. We develop our model using the speci c case of the Four Rivers Lottery used to allocate rafting permits on four river sections in Idaho and Oregon.

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Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2011-2.

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Length: 31 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:wsu:wpaper:yoder-10
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  1. David Scrogin, 2009. "Underpricing In Public Lotteries: A Critique Of User-Pay And All-Pay Tariffs," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 500-511, 07.
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  3. Wilson, Robert B, 1989. "Efficient and Competitive Rationing," Econometrica, Econometric Society, vol. 57(1), pages 1-40, January.
  4. Boyce, John R, 1994. "Allocation of Goods by Lottery," Economic Inquiry, Western Economic Association International, vol. 32(3), pages 457-76, July.
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  7. Chouinard, Hayley H. & Yoder, Jonathan K., 2004. "The Political Economy Of River Rats And Idaho'S Four Rivers Whitewater Rafting Lottery," Western Economics Forum, Western Agricultural Economics Association, vol. 3(01), April.
  8. Sherman, Roger & Visscher, Michael, 1978. "Second Best Pricing with Stochastic Demand," American Economic Review, American Economic Association, vol. 68(1), pages 41-53, March.
  9. Evans, Mary F. & Vossler, Christian A. & Flores, Nicholas E., 2009. "Hybrid allocation mechanisms for publicly provided goods," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 311-325, February.
  10. Crew, Michael A & Fernando, Chitru S & Kleindorfer, Paul R, 1995. "The Theory of Peak-Load Pricing: A Survey," Journal of Regulatory Economics, Springer, vol. 8(3), pages 215-48, November.
  11. Forbes, Silke J., 2008. "The effect of air traffic delays on airline prices," International Journal of Industrial Organization, Elsevier, vol. 26(5), pages 1218-1232, September.
  12. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
  13. Scrogin, David & Berrens, Robert P. & Bohara, Alok K., 2000. "Policy Changes And The Demand For Lottery-Rationed Big Game Hunting Licenses," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
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