Rationing the Commons

Nicholas Ryan (nicholas.ryan@yale.edu) and Anant Sudarshan
Additional contact information
Nicholas Ryan: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/nicholas-ryan
Anant Sudarshan: Energy Policy Institute, University of Chicago

No 2239, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

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.

Keywords: Common resources; Agricultural productivity; Misallocation; Sustainable development (search for similar items in EconPapers)
JEL-codes: D24 O13 Q15 Q56 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2020-06
New Economics Papers: this item is included in nep-agr, nep-eff and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in Journal of Political Economy (January 2022), Vol. 130(1): 210–257

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