Production, information and property regimes : efficiency implications in the case of economies of scope
Steele, Scott R.
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Steele, S. (1998). "Production, information and property regimes : efficiency implications in the case of economies of scope" (Working Paper No. 023) Department of Economics, National University of Ireland, Galway.
A conceptual model and numerical example are used to show that private property regimes are not necessarily preferable to common property regimes on efficiency grounds when: (1) agents are risk averse; (2) exogenous enforcement of risk sharing schemes is not feasible; and (3) the associated common property regime is characterized by economies of scope in the production of information. The paper considers a case of idiosyncratic risk in a dynamic grazing context where the marginality of the resource is such that insurance markets are thin or non-existent. The policy implication is that the establishment and maintenance of a common property regime is shown to be a (possibly) reasonable institutional response in the face of difficult and particular circumstances.