Commons as Insurance and the Welfare Impact of Privatization

Jean-Marie Baland and Patrick Francois ()

The Centre for Market and Public Organisation from The Centre for Market and Public Organisation, University of Bristol, UK

Abstract: It is shown here that despite the efficiency gains from privatization, when markets are incomplete, all individuals may be made worse off by privatization, even when the resource is equitably privatized. Such market incompleteness is common in the developing world and can explain the often encountered resistance to efficiency enhancing privatizing reforms, especially in the case of village level landholdings and forests. The advantage of commonly held property arises because of its superior insurance properties (which tend to provide income maintenance in low states). Sufficient conditions are established under which any feasible insurance scheme under private property cannot ex ante Pareto dominate allocations under the commons.

Keywords: common property; privatisation; insurance (search for similar items in EconPapers)
JEL-codes: D23 D63 Q15 Q20 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-03
New Economics Papers: this item is included in nep-ias, nep-lab and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Commons as insurance and the welfare impact of privatization (2005)
Working Paper: Commons as insurance and the welfare impact of privatization (2005)
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