The commons with capital markets

Colin Rowat and Jayasri Dutta ()

GE, Growth, Math methods from University Library of Munich, Germany

Abstract: We explore commons problems when agents have access to capital markets. The commons has a high intrinsic rate of return but its fruits cannot be secured by individual agents. Resources transferred to the capital market earn lower returns, but are secure. In a two period model, we assess the consequences of market access for the commons' survival and welfare; we compare strategic and competitive equilibria. Market access generally speeds extinction, with negative welfare consequences. Against this, it allows intertemporal smoothing, a positive effect. In societies in which the former effect dominates, market liberalisation may be harmful. We reproduce the multiple equilibria found in other models of competitive agents; when agents are strategic, extinction dates are unique. Strategic agents generally earn their surplus by delaying the commons' extinction; in unusual cases, strategic agents behave as competitive ones even when their numbers are small.

Keywords: commons; capital markets; Washington Consensus; property rights (search for similar items in EconPapers)
JEL-codes: C73 D91 O17 Q21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-12-21
Note: Type of Document - pdf; pages: 30. Department of Economics, University of Birmingham working paper 05-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: The Commons with Capital Markets (2007)
Working Paper: The commons with capital markets (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpge:0412002

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