Having said this, it is important to realize that identifying the maximum sustainable use of the resource—a function undertaken by a government in tradable permit regimes and by the user community in common property regimes—is both scientifically difficult (see Wilson, this volume:Chapter 10) and politically sensitive (see McCay, this volume:Chapter 11).

Tietenberg’s and Rose’s chapters agree on several issues. First, tradable permits perform better for managing simple common-pool resources with few negative externalities. Second, the allocation of rights is a difficult political process that has to be solved in any environmental regime. The allocation process, therefore, deserves special attention in the analysis of “implementation feasibility.” Third, both chapters point out the crucial importance of monitoring and enforcement for any institutional arrangement governing common property resources. However, given that tradable permits offer important financial rewards when sold in market, their institutional design must provide for additional monitoring of not only resource use, but also the number of permits and their transfers. This increases the monitoring costs.

In sum, these chapters make a significant contribution to the understanding of under what conditions common-pool resources are better managed through alternative institutional mechanisms. Specifically, they carefully examine the strengths and weaknesses of tradable permit regimes and common property regimes in managing common-pool resources.


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Dales, J. 1968 Pollution, Property, and Prices. An Essay in Policy-Making and Economics. Toronto: University of Toronto Press.

Gordon, H.S. 1954 The economic theory of a common property resource: The Fishery. Journal of Political Economy 62:124-142.

Hardin, G. 1968 The tragedy of the commons. Science 162:1243-1248.

Montgomery, D.W. 1972 Markets in licenses and efficient pollution control programs. Journal of Economic Theory 5:395-418.

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