The distributional impact of common-pool resource regulations

Purpose – Regulating common-pool resources is welfare enhancing for society but not necessarily for all users who may therefore oppose regulations. The purpose of this paper is to examine the short-term impact of common-pool resource regulations on welfare distribution. Design/methodology/approach – The authors model a game of common-pool resource extraction among heterogeneous users. Findings – It was found that market-based regulations such as fees and subsidies or tradable quotas achieve a higher reduction of extraction from free-access than individual quotas with the same proportion of better-off users. Also, they make more users better-off for the same resource preservation. Originality/value – The quota regulation has attractive fairness properties: it reduces inequality while still rewarding the more efficient users. JEL classification: H23, Q22, Q28