Incomplete Ownership, Rent Dissipation, and the Return to Related Investments

Abstract

The weyare loss from free access resource use is examined in a general equilibrium model. Actions that intensib competition for the resource, either by lowering the private cost or raising the private benefit of using it, can raise this loss above the rent the resource would earn if owned. Such 'excess dissipation' is illustrated with examples applicable to unowned groundwater. Regulato y policies that fix inputs needed to acquire the resource work by transferring part of the resource's rent to controlled inputs. The resulting welfare effect depends on the elasticity of substitution between, and relative prices of] controlled and uncontrolled inputs.

Restricted capacity and rent dissipation in a regulated open access fishery

“…This fits the circumstances studied in the second paper emphasized here, Deacon (1994). 3 When allocation is by first come-first served, competition to acquire the stock 3 Deacon's (1994) analysis extends a model of a price control and first come-first served allocations developed in Deacon and Sonstelie (1992) Deacon's (1994) treatment of the actions individuals take when competing for access to a price controlled good, and the rent dissipation that results. The main objective here is to see how the presence of a capital constraint affects the rents earned by fishermen and the link between rent and such economic determinants as prices, input costs and the allowed catch.…”