A popular solution to the Tragedy of the Commons is to create private property rights to access the commons. If resource users care about equity, they may be unwilling to respect property rights regimes that lead to less equitable outcomes. We explore in a series of laboratory experiments whether it is possible to undermine the efficiency of property rights solutions through the allocation process. We find that both the extent to which property rights are enforced and how they are allocated significantly affect extraction and compliance. Our findings suggest that one of the most popular allocation methods is suboptimal: we observe that occasional enforcement and the grandfathering of property rights is dominated by no enforcement and the equal allocation or inverse grandfathering of property rights. Our results challenge the view that equity is irrelevant for property rights solutions to the commons problem.
Does the Allocation of Property Rights Matter in the Commons?
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March 21, 2024
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