Rationing the Commons

Nicholas Ryan and Anant Sudarshan

No 27473, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use, in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average. The rationing regime is still grossly inefficient, because it misallocates water across farmers, lowering productivity. Pigouvian reform would increase agricultural surplus by 12% of household income, yet fall well short of a Pareto improvement over rationing.

JEL-codes: D24 O13 Q15 Q56 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-agr and nep-env
Note: DEV EEE
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Citations: View citations in EconPapers (8)

Published as Nicholas Ryan & Anant Sudarshan, 2022. "Rationing the Commons," Journal of Political Economy, vol 130(1), pages 210-257.

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