Rationing the Commons

Nicholas Ryan () and Anant Sudarshan ()
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Nicholas Ryan: Yale University - Department of Economics
Anant Sudarshan: University of Chicago - Energy Policy Institute

No 2020-93, Working Papers from Becker Friedman Institute for Research In Economics

Abstract: Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use, in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average. The rationing regime is still grossly inefficient, because it misallocates water across farmers, lowering productivity. Pigouvian reform would increase agricultural surplus by 12% of household income, yet fall well short of a Pareto improvement over rationing.

Pages: 82 pages
Date: 2020
New Economics Papers: this item is included in nep-agr, nep-dev and nep-eff
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:bfi:wpaper:2020-93

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