Cost Pooling in Australian Grain Handling: A Common Property Analysis

John Quiggin, Brian S. Fisher and Deborah C. Peterson

American Journal of Agricultural Economics, 1994, vol. 76, issue 2, 262-269

Abstract: The common property analysis of Rausser, Zusman, and Foster is expanded and applied to Australian grain transportation systems. With a conservative decision rule, a statically inefficient cost pooling system may lead to optimal investment decisions as benefits become pooled. With Ramsey pricing in contrast, losers may veto many investment decisions, so that allocations become ‘equitable’ but technically inefficient. Efficiency gains from price policy reform may not be achieved unless accompanied by property right reallocation.

Date: 1994
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