Congestion and Over-exploitation of Free Access Resources

Free-access or common-property resources are important in accounting for many environmental problems like pollution, congestion and the over-exploitation of natural resources, but we still lack a completely satisfactory framework within which to analyse them. Typically, a freeaccess resource is one whose physical characteristics make it impossible or costly to divide it among competing users in a way that gives each producer complete control over the allocation of his portion of the resource. As such, a free-access resource obviously differs from a pure private good, but it also differs from a pure public good in that an increased use of the resource by one agent will have a direct effect on other users. If access to the resource is unrestricted a large number of agents may be affected, while the characteristics that make exclusion costly will almost certainly rule out the possibility of internalizing the externality by pairwise bargaining. It is therefore probable that free market competition will lead to an inefficient use of the resource. Free-access resources may be polluted, congested or over-exploited, which suggests that there may be important distinctions between different kinds of inefficiency. Can these distinctions be made precise within a unified analysis of free-access resources? Two writers, Haveman (1973) and Gould (1972), have recently attempted to draw distinctions between various kinds of inefficiency and to examine the nature of the differing resource misallocations. Haveman contrasts pollution, congestion and what he calls the common-property case, which he illustrates with a depletable natural resource. Pollution differs from the other two in that the costs of the reduced quality of the free-access resource are typically borne by a different set of agents than those who cause the pollution. The externality is unidirectional, and not, therefore, selflimiting. This distinction and its consequences are clear-cut, interesting and need detain us no further. Haveman further argues that the basic source of the misallocation in the congestion case is quite different from that of the common-property case. the congestion case, overuse is encouraged because real crowding costs imposed by users on each other are not reflected in marginal use decisions. In the common property resource case, excessive output is stimulated by the negative user cost

Business · Common-pool resource · Competition (biology) · Economics · Environmental economics · Externality · Free access · Free entry · Inefficiency · Microeconomics · Natural resource · Natural resource economics · Resource (disambiguation) · Computer Science · Ecology · Economic and Environmental Valuation · Fiscal Policy and Economic Growth · Game Theory and Voting Systems · Law

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