Interest group incentives for post-lottery trade restrictions

Adrienne Ohler (), Hayley Chouinard () and Jonathan Yoder ()

Journal of Regulatory Economics, 2014, vol. 45, issue 3, 304 pages

Abstract: The rights to use publicly-managed natural resources are sometimes distributed by lottery, and typically these rights are nontransferable. Prohibition of post-lottery permit transfers discourages applicants from entering the lottery solely for profitable 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 argue that restrictions on permit transfers is a policy response designed to limit entry when interest group membership is not distinguishable ex ante, and characterize the economic/informational conditions under which post-lottery prohibitions on trade are likely to arise. We develop our model using the specific case of the Four Rivers Lottery used to allocate rafting permits on four river sections in Idaho. Copyright Springer Science+Business Media New York 2014

Keywords: Lottery; Interest groups; Tradable permits; Welfare analysis; D45; D61 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11149-014-9246-y

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