The Tradeoff of the Commons

McAfee, R. Preston and Miller, Alan (2010): The Tradeoff of the Commons.

Abstract

We develop a model of scarce, renewable resources to study the commons problem. We show that, contrary to conventional wisdom, property rights can often be less efficient than a commons. In particular, we study two effects: (1) waste which arises when individuals expend resources to use a resource unavailable due to congestion and (2) the risk of underutilization of the resource. We provide necessary and sufficient conditions for each effect to dominate the other when the cost of determining the availability of a resource is low.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tragedy of the Commons; Spectrum; Open Access; Appointments; Property Rights; Reservations
• Subjects: D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior ; Transaction Costs ; Property Rights; K - Law and Economics > K2 - Regulation and Business Law > K23 - Regulated Industries and Administrative Law; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D45 - Rationing ; Licensing

References

Bagnoli, Mark and Bergstrom, Ted. (2005). ‘Log-concave probability and its applications’, Economic Theory 26, 445–469.

Barro, Robert J. and Romer, Paul M. (1987). ‘Ski-Lift Pricing, with Applications to Labor and Other Markets’, The American Economic Review 77, 875 – 890.

Benkler, Yochai. (1998). ‘Overcoming Agoraphobia: Building the Commons of the Digitally Networked Environment’, Harvard Journal of Law and Technology 11, 287–400.

Benkler, Yochai. (2002). ‘Some Economics of Wireless Communications’, Harvard Journal of Law and Technology 16, 25–83.

Cave, Martin and Webb, William. (2004), Spectrum Licensing and Spectrum Commons — Where to Draw the Line, in ‘Wireless Communication Policies and Politics: A Global Perspective’, University of Southern California, Annenberg Research Network on International Communication.

Coase, Ronald H. (1959). ‘The Federal Communications Commission’, Journal of Law and Economics 2, 1 – 40.

Gordon, H. Scott. (1954). ‘The Economic Theory of a Common-Property Resource: The Fishery’, The Journal of Political Economy 62, 124–142.

Hardin, Garrett. (1968). ‘The Tragedy of the Commons’, Science 168, 1243–1248.

Hazlett, Thomas. (1998). ‘Spectrum Flash Dance: Eli Noam’s Proposal for “Open Access” to Radio Waves’, Journal of Law and Economics 41, 805–820.

Heller, Michael A. and Eisenberg, Rebecca S. (1998). ‘Can Patents Deter Innovation? The Anticommons in Biomedical Research’, Science 280, 698–701.

Lessig, Lawrence. (2001), The Future of Ideas: The Fate of the Commons in a Connected World, Random House: New York.

Noam, Eli. (1998). ‘Spectrum Auctions: Yesterday’s Heresy, Today’s Orthodoxy, Tomorrow’s Anachronism. Taking the Next Step to Open Spectrum Access’, Journal of Law and Economics 41, 765–790.

Roth, Alvin E. and Xing, Xiaolin. (1994). ‘Jumping the Gun: Imperfections and Institutions Related to the Timing of Market Transactions’, The American Economic Review 84, 992–1044.

Scott, Anthony. (1955). ‘The Fishery: The Objectives of Sole Ownership’, The Journal of Political Economy 63, 116–124.