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The tradeoff of the commons under stochastic use

Xiaoyong Cao () and Jiong Gong ()

Journal of Public Economics, 2017, vol. 145, issue C, 150-161

Abstract: We develop a model of scarce renewable resources to study the problem of the commons. Our model formulation differs from the existing literature in that it assumes the use of the commons to be stochastic in nature. One example is microwave spectrum for mobile and wireless communications. We investigate three mechanisms of resource allocation: free usage, the exclusive franchise, and a regulated monopoly. We show that the welfare tradeoff among these three mechanisms depends on the characteristics of the commons and their usage patterns. In particular, we find that property rights are not always the best solution. We then make four extensions that apply to spectrum allocations.

Keywords: Commons; Pricing; Welfare (search for similar items in EconPapers)
JEL-codes: C60 H42 I31 L51 (search for similar items in EconPapers)
Date: 2017
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