Resource Rights and Markets in a General Equilibrium Model of Production

Henry Thompson

Environmental & Resource Economics, 2013, vol. 56, issue 1, 139 pages

Abstract: Rights to a free resource lead to distributional deadweight losses in partial equilibrium. The present paper examines related distortions in a general equilibrium model of production with output prices constant for the small open economy. The free resource can result in lower output than a market with weak substitution in the other sector. The free resource also leads to a convex production frontier implying a price increase lowers output in the sector. Regarding policy, an import tariff, export subsidy, or price support would lower sector output. These general equilibrium distortions increase the incentives to favor resource markets over rights. Copyright Springer Science+Business Media Dordrecht 2013

Keywords: Free resource; Water rights; General equilibrium; Q20; Q30; D50 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s10640-013-9656-9

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