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When is increasing consumption of common property optimal? Sorting, congestion and entry in the commons

Jonathan Hughes () and Daniel Kaffine

Journal of Environmental Economics and Management, 2017, vol. 81, issue C, 227-242

Abstract: First-best pricing or assignment of property rights for rival and non-excludable goods is often infeasible. In a setting where the social planner cannot limit total use, we show that common-property resources can be over or under-consumed. This depends on whether the external benefits of reallocating users to less congested resources outweigh the additional costs imposed by new entrants. Importantly, we show that it may be optimal to encourage consumption of some common property resources. Our results have important implications for settings ranging from fisheries and forestry to recreational demand and transportation.

Keywords: Common property resources; Congestion externalities; Tragedy of the commons (search for similar items in EconPapers)
JEL-codes: Q2 Q5 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.jeem.2016.05.003

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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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