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On the redistributive impact of privatizing a resource under imperfect enforcement

Published online by Cambridge University Press:  17 November 2006

STEFAN AMBEC  and
LOUIS HOTTE
STEFAN AMBEC
Affiliation:
INRA-GAEL, University of Grenoble, BP 47, 38040 Grenoble Cedex 9, France. Email: ambec@grenoble.inra.fr
LOUIS HOTTE
Affiliation:
University of Ottawa, CRED and University of Namur. 200 rue Wilbrod, Ottawa, Ont., Canada, KIN 6N5. Email: lhott3@uottawa.ca
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Abstract

We consider the redistributive effects of privatizing a resource previously exploited under free access. We assume that illegal extraction is punished but that the sanction is bounded by individuals' wealth. First, we show that a segment of intermediate-wealth individuals is the most adversely affected from the regime change, while the poorest segment is not only less severely affected, but may actually gain from it. Next, we show how the authorities may prefer to choose an intermediate enforcement level in order to maximize the political acceptability of the regime switch among the local community.

Type
Research Article
Information
Environment and Development Economics , Volume 11 , Issue 6 , December 2006 , pp. 677 - 696
Copyright
2006 Cambridge University Press

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Footnotes

We thank Philippe Aghion, Jérôme Bourdieu, Peter Burton, Nicolas Gravel, Christian Tritten and seminar participants at: The Canadian Resource and Environmental Economics Group 2002 Conference, Montreal; Journées Jeunes Chercheurs INRA-ESR, 2002, Paris; and Journées d'économie publique, 2003, Marseille, for useful comments.