January 16, 2011

The Distributional Impact of Common-Pool Resource Regulations

by Stefan Ambec and Carine Sebi

- Regulating common-pool resources is welfare enhancing for society but not necessarily for all users who therefore may oppose regulations. We examine the short-term impact of common-pool resource regulations on welfare distribution. Market-based regulations such as fees and subsidies or tradable quotas achieve a higher reduction of extraction from free-access than individual quotas with the same proportion of betteroff users. They make also more users better-off for the same resource preservation. The quota regulation has attractive fairness properties: it reduces inequality while still rewarding the more efficient users.

Stefan, A. and C. Sebi (2010). "The Distributional Impact of Common-Pool Resource Regulations." LERNA Working Paper, n. 10.19.325, Dec 2010.