Hughes, J. E.; Kaffine, D.
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Department of Economics, University of Colorado at Boulder, Box 0256 UCB, Boulder, CO 80309, USA.
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Journal of Environmental Economics and Management
First-best pricing or assignment of property rights for rival and non-excludable goods is often infeasible. In a setting where the social planner cannot limit total use, we show that common-property resources can be over or under-consumed. This depends on whether the external benefits of reallocating users to less congested resources outweigh the additional costs imposed by new entrants. Importantly, we show that it may be optimal to encourage consumption of some common property resources. Our results have important implications for settings ranging from fisheries and forestry to recreational demand and transportation.
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consumption, demand, externalities, fisheries, forestry, land resources, land use, property rights, public domain, recreation, resource allocation, transport