How Transaction Costs Obstruct Collective Action: Evidence from California's Groundwater / Andrew B. Ayres, Eric C. Edwards, Gary D. Libecap.

Format:

Book

Author/Creator:

Ayres, Andrew B.

Contributor:

National Bureau of Economic Research.

Edwards, Eric C.

Libecap, Gary D.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23382.

NBER working paper series no. w23382

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

How Transaction Costs Obstruct Collective Action

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

Collective action to remedy the losses of open access to common-pool resources often is late and incomplete, extending rent dissipation. Examples include persistent over-exploitation of oil fields and ocean fisheries, despite general agreement that production constraints are needed. Transaction costs encountered in assigning property rights are an explanation, but analysis of their role is limited by a lack of systematic data. We examine governance institutions in California's 445 groundwater basins using a new dataset to identify factors that influence the adoption of extraction controls. In 309 basins, institutions allow unconstrained pumping, while an additional 105 basins have weak management plans. Twenty of these basins are severely overdrafted. Meanwhile, users in 31 basins have defined groundwater property rights, the most complete solution. We document the critical role of transaction costs in explaining this variation in responses. This research adds to the literatures on open access, transaction costs, bargaining, and property rights

Notes:

Print version record

May 2017.