"Property Rights and Natural Resource Management"

Stroup, Richard, and John Baden
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First Pub. Date
September-December 1979
Literature of Liberty. Vol. ii, no. 4, pp. 5-44. Arlington, VA: Institute for Humane Studies
Pub. Date

1. [1.] Richard Stroup is Associate Professor of Economics and Co-director of the Center for Political Economy and Natural Resources; John Baden is Director of the Center, at Montana State University. They wish to thank their colleagues, Terry Anderson and P.J. Hill for helpful suggestions, while retaining responsibility for any flaws.

2. [2.] Douglass North, "A Framework for Analyzing the State of Economic History," Explorations in Economic History 16 (1979):249-259.

3. [3.] See North (1979):250. This article discusses the factors influencing the way in which rulers of a state advance their own control over resources by selecting from among alternative sets of property rights rules. Economic growth and efficiency can be means to the ruler's ends, but only if the ruler can capture enough of the consequent benefits relative to more easily monitored, controlled, and taxed systems.

4. [4.] Economists of the Austrian school emphasize the role of the entrepreneur who, in his search for profit, finds higher valued uses for resources previously used in a less valuable fashion. See, for example, Ludwig von Mises, Human Action, and Israel Kirzner, Competition and Entrepreneurship.

5. [5.] The workings of the market are explained nonmathematically, with a minimum of jargon, from a property rights approach, in four books on economic principles: Armen Alchian and William Allen, University Economics; James Gwartney and Richard Stroup, Economics: Private and Public Choice; Paul Heyne, The Economic Way of Thinking; and Svetozar Pejovich, Fundamentals of Economics.

6. [6.] A systematic treatment of the "accepted wisdom" on market failure is Francis Bator, "Anatomy of Market Failure," The Quarterly Journal of Economics (August 1958):351-379.

7. [7.] Nearly all introductory economics texts cover this general problem of monopoly, including the four cited in the previous note.

8. [8.] See Corpus Juris Secundum, Vol. 66, p. 9461. This common law approach is being supplemented by statutory laws which proclaim the mere existence of a pollution source a nuisance, apart from demonstrated damage. Such laws are currently being challenged in the courts.

9. [9.] Note that if property rights in clean air were easily enforced, pollution would still be produced, but only in efficient amount: polluters would compensate those damaged, and would reduce pollution until further reductions were more costly than fully compensating all those harmed.

10. [10.] If many well-owners pump more rapidly from many pools, ignoring the "user cost," or reduced availability from each pool later, then oil market prices can be depressed. That happened in the United States in the 1930s, leading to government control of oil well production. See Edward Mitchell, U.S. Energy Policy: A Primer (1974).

11. [11.] A relatively nontechnical presentation of the economics of government failure, paralleled by this section but with emphasis on different applications, is Gwartney and Stroup, Economics: Private and Public Choice (1980), 2nd edition, chapter 32. See also McKenzie and Tullock, Modern Political Economy—An Introduction to Political Economy (1978), chapters 5 and 6; Charles Wolf, " A Theory of Non-market Failures;" and William Mitchell, The Anatomy of Government Failures (1979).

12. [12.] For more rigor and detail on this and related aspects of the political process see Gordon Tullock, Toward a Mathematics of Politics (1967).

13. [13.] John Krutilla and Talbot Page, "Paying Tomorrow for Energy Today," Resources, No. 49 (June 1975).

14. [14.] In reality, the value of the mine in "current" development is subject to some uncertainty, particularly since development is not really confined to one short time period. But the degree of uncertainty is small relative to development farther into the future. One could work with a similar, though much-compressed, distribution of estimates of value in current use, but that would seem to add complexity with no change in the basic outcome in comparing private and collective management systems.

15. [15.] Median voter is the individual whose E(P) splits the distribution, in the sense that half the other people lie above him, and half below.

16. [16.] Robert Solow, "The Economics of Resources or the Resources of Economics," American Economic Review 64 (May 1974):10.

17. [17.] Solow, "The Economics of Resources or the Resources of Economics," 13.

18. [18.] Anonymous, Detailed Fact Sheet: The President's Energy Program.

19. [19.] See Weidenbaum and R. Harnish, Government Credit Subsidies for Energy Development (1976).

20. [20.] See Weidenbaum and Harnish.

21. [21.] Table constructed by Shelia Hart.

22. [22.] John Baden, "Subsidized Destruction of Alternative Energy," mimeo, Center for Political Economy and Natural Resources (October 1979).

23. [23.] Eleanor Leacock, "The Montagnais 'Hunting Territory' and the Fur Trade," American Anthropologist (1954), page 12.

24. [24.] Frank Speck, "A Report on Tribal Boundaries and Hunting Areas of the Malecit Indians of New Brunswick," American Anthropologist (1946).

25. [25.] See also by Baden and Stroup "The Environmental Costs of Government Action," Policy Review (Spring 1978):23-38; "Response to Krutilla and Haigh," Environmental Law, Vol. 8, pages 417-421.

26. [26.] See Harold Demsetz, "Toward a Theory of Property Rights."

27. [27.] See Charles Schultze, The Public Use of the Private Interest, and James Schlessinger, "Systems Analysis and the Political Process."

End of Notes.

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