Download PDF

Gi annini FON Library
Illlrn 1111 11111Hll ~I IH11111111
002300
...
·. -
December 1984
No. 231
..Jroper t y Rights and Ec ~ nor:iic I ri.cenc.i•,es
in
Resc1.1rc.e. and Environmental ~ystcms
by
Daclel W. Broml ey
PROPERTY RIGHTS AND ECONOMIC INCENTIVESl
IN
RESOURCE AND ENVIRONMENTAL SYSTEMS
Daniel W. Bromley
Department of Agricultural Economics
University of Wisconsin
Madison
It is fitting at a session concerned with ''The Political Economy of
Natural Resource and Environmental Use" that we devote some time to the
consideration of property rights and economi c incentives. I take as my
charge the presentation of a conceptual view of property rights as they
influence resource control and hence resource use. It comes as little
surprise to most of you that property rights have moved to
cent~r
stage in
the work of most resource economists. I suspect that it is· not so well
understood that a large part of the literature concernin5 pr opert y ri ghts
is both logically circular, and explicitly prescriptive in terms of how
natural resources ought to be controlled. This attention to the current
literature is necessitated by the fact that some economists nay not
appreciate the fact that there are at least two different "propertyrights" approaches to resource economics.
I have no interest in arguments about how natural resources ought to
be controlled--except to the extent that normative arguments are used to
prescribe what ought to be from a set of logical premises that are
1 Paper presented to the Southern Natural Resource Economics
Committee meeting, Charleston, South Carolina, October 18, 1984.
2
strictly positive in nature. Hence my discussion today will focus on the
problem of normative prescri ptions being derived from a body of theory
that most would agree is best suited to description and explanation.
Because my appointed title mentions both rights and economic incentives I will be able to talk to you about mutually causal analysis. That
is, we can address the ques tion of how property rights _influence economic
incentives, aud how economic incentives influence the structure of
property rights.
What follows is divided into several major sections. I will first
discuss the conceot of
property rights as represented by a group of
economists operating under the label of the "property-rights" school. My
major point in that part of the paper will be to argue that the so-called
"prope!'ty-rights approacl1" has come to represent a particular political
outcome vis-a-vis n aturaJ resource control. Since the conclusions of the
school cannot help but
follow from the premises employed, economists who
nay wish to approach natural resource matters from a slightly more
agnostic stance regarding which particular institutional structure best
serves social goals are forced to sear ch for a label other than the one
alread y preempt ed by the "property rights" group. I will sugge st that the
term "institutional economics" adequately describes this domain of
work--just as it has for some years until read out of the mainstream of '
economics by the post-World War II outbreak of physics envy.
I will then turn to a discussion of "rent-seeking behavior" since
this class of human activity has recently began to occupy an important
place in natural resource economics theory. We will see how the pejorative
3
connotations attaching to rent seeking are derivative of the conceptual
views adopted by those employing the property-rights approach--or, as
recently described, the "property rights, public choice, Austrian economics" methodology [Anderson].
I will close with some suggestions for incorporating institutional
considerations iuto our re source economics paradigm.
THE CIRCULARITY OF THE PROPERTY RIGHTS MODEL
Simply put, the property-rights approach to resource economics starts
with the premise that society is best served by a large numbe r of atomistic economic agents doing what homo oecon omicus does best --buying and
selling. But in order to buy and sell, the wo rld must consist of tangible
and divisible commodities about which very good information is available,
and over which ownership has been defined and is not in dispute. Since
this approach starts with the assertion that such a structure will lead to
the best of all possible worlds, it takes little imagination to reach the
conclusion that therefore the world ought to be structured that: way. This
part of the approach owes its intellectual heritage to the Austrian
school. There is another strand in this approach that is traceable to some
persistent confusion in the very concept of property. For an approach t ha t
place s so much emphasis on property rights it does not seem unreasonable
to expect that the concept be studied and under stood in its entirety. This
does not seem to be the case.
Property is a social relation that defines expectations with respect
to a thing or an act--expectations on the part of at least two parties.
There must be at least three aspects to property--the thing "owned", the
4
"owner", and all others. Because property is a set of social relations and
expectations, the core of property is security; security with respect to
the actions of others vis-a-vis the thing of value. It is the very fact
that others in society want what you have that gives security its meaning;
property is the ability to exclude others from enjoying what you have.
·.
Where there is nu exclusion there is no security, and there can thus be no
property--by definition.
If this simple
~spect
of property were understood it would be
impossible for economists to continue to perpetuate the confusion between
open access resources (res nullius) and common property resources (res
communis) [C i riacy-Wantrup and Bishop]. In open access there is no
property since thtre are no secure expectations of gain . Open access is
nothing more than that--access. The oft-used phrase "everybody 's property
is noLody's property 11 is therefore logically inconsistent. If one is
searching for aphorisms, we are stuck with ''open access is nobody's
property."
Common property is characterized by
t~o
important characteristics:
(1) a well defined group of users; and (2) a set of rules for deciding use
rates of the group. There is property in common property. If you do not
believe me try going to a Swiss commons with
a herd of cattle. The
extended economic zone of ten years ago converted open access fisheries to
common property. The same can be said for the Taylor Grazing Act in the ·
western United States.
This is not a mere semantic game . The property-rights approach would
have us believe that there are only three possible property regimes--a
free - for-all (variously called open access, common property, or communal
5
property), public property (what the state controls, viz. national forests
and military bases) and private property. Since we are all in agreement
that a free-for-all is almost certain to result in destruction of the
resource, and since there are many economists who believe that the state
can only mess things up, that leaves proponents of the property-rights
approach with only one viable alternative--private property. Happily for
them, this is the same outcome that was guaranteed by tha assumptions with
which the property-rights approach started.
Most economists trained in the western tradition would agree with the
conclusion that if the conditions are conducive to the operation of
markets, then by all means let markets work. The argument comes uver
whether or not the conditions exist for the operation of markets. A second
argument of greater social import is whether or not functioning markets
will correctly reflect the marginal social values that will command wide
assent. It is one thing for markets to work; it is quite another to
conclude that the outcomes of market processes are socially preferred. One
only need go back to child labor in the 1800's for an example of functioning markets with anti-social performance. There are other, more recent ,
examples.
If we are careful to distinguish between explanation and advocacy
then resource economists would do well to heed some of the insights of the
property-rights approach. Property rights do arise when the benefi ts of
defining and enforcing rights exceed the transaction costs attached
thereto. But we must be wary pf the circularity in even this appealing
logic. It is, after all, property rights that facilitate exchange and
hence an expression of value in a market sy stem . To say that property
6
rights arise when the benefits e xcee d the costs is also to say that if no
rights (and hence markets) exist then it must be optimal that the y not
exist. It should be obvious that this imbues the status quo with some
rather powerful claims.
It should also be obvious that those currently protected by rights
will look upon iastitutional change with suspicion, while tho se currently
exposed to the ri ghts and presumptive rights of others Mill view institutional change as ~ liberati n e opportuni ty. To anticipate a theme to be
elaborated upon
b~low,
the shifting of
~conomic
The
rela~ionship
property relations
~re
it is inevitable that institutional change is about
advantage among members of society .
between institutional arrangements--of which
of greatest interest to us here--and the economic
behavior of individua ls a nd groups finds its clearest expression in the
recent interest amon8 some resource economists in "rent seeking." Let us
consider r ent seeking with the aid of an institutionalist perspective.
THE OTHER SIDE OF RENT SEEKING2
The original wor k on rent seeking is attributed to Krueger and _others
in the context of international trade. Specifically, quotas, tari ffs , and
non-tariff barriers to trade intercede to cause a divergence between trade
patterns--and relative prices--in the real world and what the situation
would be in the absence of these institutional realities [Krueger]. Rent
seeking then becomes a description of that activity directed toward the
establishment of these instit uti onal arrangements; there are economic
2 For other critical views of the current developments in rent-seeking theory see Bhagwati 1980, 1982; Bhagwati and Srinivasan; and Samuels.
7
gains to be obtained by certain parties if only these institutional
arrangements might be perpetuated. Rent seeking occurs when the expected
value of the economic gains exceeds the costs. It is these costs that are
considered to be dead-weight losses to the economy. Rent seeking is a
negative-sum game. It is using the " ... coercive power of the government to
increase persona: wealth for some at the expense of others [Anderson, p.
932). 11
Of direct interest to us today, rent seeking is said to occur when
public agencies manage natural resources. Again to quote Anders on:
" ... when the Department of [the] Interior decides whether public lands
will be used for timber, g raz ing , recreation, or wildlife, they are
affecting the distribution of benefits to consumers. It is not surp r ising
that interest g roups employ va luable resources trying to influence these
decisions. When the entrepreneur discovers unforeseen op?ortunities to use
government to increase his wealth, rent creation--a positive -s um garue - -is
replaced with rent seeking--a negative-sum game [p. 932)."
The important distinction between rent creation and rent seeking
merits careful consideration. To reiterate, rent creation is
preneu~s
~hat
entre-
do when they seek profits within a status-quo structure of
entitlements; this is said to be good. On the other hand: rent seeking
. ..
is
what entrepreneurs do when they devote financial resour ces to altering the
structure of enti tlement s; this is said to be bad. Rent creation is "pie
enlarging"; rent seeking is simply redividing a pie of a fixed size. If
this looks like the familiar distinction between "efficiency" and "distribution" do not be surprised.
It is only a short leap from this rediscovery of an emotive--yet
8
persistent--d istinction in economics to the conclusion that public control
of natural resources is a negative-sum game. It follows therefore that
private ent itlements for natural resources should be established so that
we can get on with the happy business of creating rents--as opposed to
merely fighting over them.
Let us look at this normative prescription in the harsh light of
theory. Simply put, it is the structure of ~t o perty ent~ tlements that
defines the buying and selling domain of che above -ce lebrated entrepreneurs. It is also that institutional structure which permits certain
social costs to go unrecorded in the books maintained by these entrepreneurs. Need I remind you of toxic chemicals
b~in e
dumped into t he nearest
watercourse ? Of automobile emissions? Of the scars of
sc~ip-mined
land
that companies consider "too expensive" to r estore to pre-mined conditions? Of health problems and o verall safety among coal miners ? This
audience needs no elaboration on externalities.
Rent-s~eking
activity is
present here too--first in the f orm of the victims attempting to change
the institutional structure that gives current emitters these presumptive
rights. Second, rent seeking is a description of the entrepreneurial
behavior of emittors as they spend mone y to influence the political system
in order to retain their current privilege (presumptive rights).
•
. ..
What sort of normative model is required to label the political
struggle to correct these externalities as "nega tive-sum games"? Those who
lament rent seeking as a drain on the economy seem to wish for the state
to step aside and let entrepreneurs buy and sell in some stylized version
of the world where all entitlements (property) have been determined once
and for all in the secular analogue of the immaculate conception. It is
9
the state--acting on the petition of those who desire change- - that seems
to stand accused of fostering rent seeking. The implication seems to be
that if we could only get the state out of this business--along with the
pernicious ''special interests''--then all dead-weight losses would be
eliminated .
Th e other side of rent seeking behavior has to do precisely with the
political struggle over entitlements, and the costs that are then shifted
to other parties. Resource economics cannot seriously entertain a model
that is locked in a time warp of the present with no recognit ion of the
ever- changing nature of resource scarcities, conflicts, and ecological
threats. And it is here that we encounter the third leg of the "property
rights, public choice, Austrian'' view of resource economics . The public
choice aspect is properly concerned with the
~ays
in which non-market
processes operate to allocate resources; the theoretical
c~ntribution~
this branch of economics are far reaching and legend. But for resource
economists the public-choice approach--at least in its Wicksellian
variant--is seriously preferential toward the status quo structure of
entitlements.
The prevailing structure of entitlements gives certain economic
agents rights and privileges, and it leaves others with duties and
exposure . Strip miners have privilege ( presumptive rights) to ignore the
interests of those who despa i r about a scarred landscape; coal-burning ·
utilities have privilege (presumptive rights ) to ignore the costs of acid
deposition now borne by a number of individuals in the upper midwest and
the northeast--not to mention Canada; paper mills, at least until recently, had privilege (presumptive rights) to ignore the costs imposed on
10
those who liked trou t. The Wicksellian approach to public choice theory
would ask that all changes of existing entitlements be accompanied by
compensation; only with actual compensation can we be certain that we are
avoid ing Pareto-inferior changes.
On its face this has a nice ring to it; few of us relish the thought
of t he state continuously shi fting opportunity sets and hence economic
advantage. It reminds one of the famous phrase to the effect that no ma n 's
property is safe while tte le gislature is in session. But on ref l ection,
we are led to quite another position . The Wicksellian demand for unanimity
is the equivalence of the ''first-come, first-served'' doctrine that is a
favorite among a subset of the population- - most particularly those who
managed to be first. Econohlic theory, philosophy, and the courts have yet
to find compelling argumen t s to support the idea that fortuitous first
arr ival offers a gene r al claim to much of anything--except being able to
claim that you we r e first.
The reason that resource economists need to be wo rr ied about Wicksel lian grid-lock is that many resource problems are of recent vintage . How
long have we had among us kepone, aldicarb, dioxin, 2,4 D, 2,4,5-t, and
PCB's? As new
knowledg~
permits us to find new ways to pose environmental
threats, there does not. seem any compelling reason to suppose that we must
buy out every possible offending action.
New knowledge wo rks in another way as well. The famous Virginia
Cedar-rust statute discussed by Warre n Samuels and Jim Buchanan permitted
the destruction of rust-infested Red Cedar trees on pe tition of 10 apple
orchardists [Buchanan 1972, Samuels 1971, 1972]. The critical element in
this dispute was the ability to establish causality between the rust on
•
11
Cedars, and the ultimate damage to apple trees . In the absence of scientific knowledge of this sor t the hostile environment for apple trees might
have been attributed to "natural conditions." And, natural conditions are
I
not amenable to policy ~hanges; Red Cedar rust is.
I
: The concept of rent seeking has been employed by some resource economists as another tack in a general position favoring pervasive market
processes in natural resource control. It has, interestingly enough, the
j
I
I
I
I
I
I
appear.ance of a backlash against received doctrine that market failure is
J
'
I
botl1 necessary and sufficient for collective action regarding resource
I
I
use . The early work in resource economics was built upon a rationale that
collect ive action could correct the failu re s of atomjstic choice. The
·i
counter attack has caused advocates of the conventi ona l wisdom to retreat
'
somewha t, and to admit that while market failure mav persist as a necessary condition for collective action, it is surely not sufficient.
~1hat
is
required is that col lect i ve action --and that will usually mean the state
on behalf of involuntary cost bearers--be shown to be better than the
status quo market processes .
However the fallac y in this new approach is the same one thct plagued
the earlier view; that fallacy is strict adherence to the efficiency norm
as a means to evaluate ins titutional arrangements . The conventional view
· -believed in markets, but also recognized social costs not re f lected in
markets. It was a reluctant admission that col lective action was necessary
to avoid the more serious outcome. The contemporary reaction to that
approach is based upon the optimistic theory of economists who were
writing at a time of extreme social and economic proscription against the
individual in 18th century Europe . That writing is optimistic because it
l
...
I
..
'
r
I
I
I
I
I
I
I
I
I
12
confused material production of a bundle of goods and services at the
lowest outlay of financial resources with the nebulous concept of social
welfare; that confusion persists even today.
The original view of resource economists was to minimize the social
costs of imperfect markets . The more recent approach is interested in
maximizing the economic dividend from natural resources--and the view
persists that uhiquitous markets are the appropriate means to that end.
However, neither view addresses the institutional question in a
logically consistent
manner~
and both views fail to recognize the crucial
fact that economic efficiency only has analytical meaning within a
particular
struc~ure
0f entitlements (institutions). Two efficient
outcomes, one under institutional structure A and the other under institutional structure B are usually Pareto non-comparable. More importantly, a
status quo that is Pareto -in ferior to some possible outcomes can quite
easily be Pareto non-comparable to a larger number of other possible
outcomes. In the strictest sense it . might even be said that all instances
of institutional change are Pareto non-comparable. This is so for the
simple reason that welfare economics is concerned with marginal changes
from within a basic structure of resource endowments (property rights) and
income positions . If that insti tut ional
str~cture
changes then the concept
of Pareto-comparability is seriously threatened [Bromley).
Many resource economists now seem to recognize this, but to abandon
conventional efficiency analysis is seen as giving up on the dimension
that economists feel most comfortable doing. But are the prospects that
bleak? Let us see what is left for economists to do.
13
PROPERTY AND ECONOMIC CONDITIONS
Neoclassical economics teaches us to look at the world as an arena of
commodity relations. The focus is on things, and on the participants
engaged in the process of exchanging these things. The prices of these
things are usually considered to reflect marginal social values. Someresource economists are now spending an
inc~ea s in g
share of their time
attempting to simulate market-like processes s o as tc ascertain values .
Part of this emphasis is motivated by the purely scho l arly desire to know;
another part is driven by the demands of the political process that is
seeking these measures of relati ve value to tacilitate tradeoffs against
goods and services bearing market ?rices.
But the resource e c onomist tends to look at co!L.Illocities, discommodities (poliutants), and their real or simulated mar ket&. The interest is
generally motivated by concern for prices and quantities in the present,
as well as 1ntert emporally.
An economist inclined toward an institutional perspective would not
be as interested in prices and quantities. That i s , the world of commodity
relations is only of secondary interest to the structure of institutions
that define individual opportunity s ets, and hence
th~
domain of choice
over which economic agents can buy, sell, and shift costs to others. This
subset of the institutional setup is usuall y referred to as "property
rights."
A study of property rights and economic incentives would start by
recognizing the dual nature of the issue as discussed at the outset.
14
Specifically, property institutions determine economic conditions and so
incentives, and economic conditions in turn determine property relations.
Let us consider the first of these relationships--property institutions influencing economic conditions. This is the simplest and most
familiar to economists. After all, we constantly deal with the manifestations of a particular property structure, namely the status quo. The
prevailing
institutional structure defines who it is thot must consider
which costs, and who is able to shift costs to others . The status quo also
defines the level and incidence of transaction costs; this is well
understood among resource economists.
The other direction of causality represents not the static conditions
of the present but rather the press for institutional change in the
legislature and in the courts; here economists feel less comfortable. The
current struggle over acid deposition, strip-mine reclamat i on, nuclear
waste disposal, soil erosion, and toxic chemicals is precisely one of
economic conditions influencing institutional (property) arrangements. An
effluent tax on waste discharges is a property change since the emittor
was formerly enjoying privilege or presumptive rights, whi!e the victims
had no rights. An effluent tax is a manifestation of a change in property
relations among emittors and victims.
On the one hand it is curious why this dimension of political economy
should be so troublesome for economists. But then economics is a science
that works best at the margin; much institutional change is
inframarg~nal
in nature. Secondly, institutional change is not something that is bought
and sold as are conventional commodities. The third reason is that
contemporary economics is almost exclusively dominated by an interest in
15
what is "optimal"--and optimality is least elusive when captured in a
mathematical expression. Finally, institutional change involves e xt ramarket processes about which economists are notoriously innocent--considering it unclean.
I consider it most helpful to begin any enquiry by asking about the
current incidence of costs--that is "who is bearing which costs?" In the
case of acid deposition it is fairly obvious who the cost bearers are. The
same can be said for such
i~sues
as strip-mine reclamation, disposal of
toxic chemicals, and soil erosion. Once we have determined who is benefiting and who is bearing costs from the status quo, the next question is to
enquire about the in$t ituti onal structure that permits this situation. We
would r.ext be interested in the nature and incidence of transaction costs .
The aggregate of this information would reveal the reasons for the
current pressure for institutional change, as well as the forces that
prevent any movement from the status quo. Our insights into the nature and
magnitude of costs and benefits are critical in defining the problem, in
formulat i ng possible solutions, and in evaluating these solutions. While a
full-blown cost-benefit analy sis may not be possible, it will usually by
possible to conduct an analysis of the
co~t-effectiveness
of certain
solutions. We often tend to downplay the importance of these contributions.
Now the conventional way of addressing this situation is to argue
that there is market failure and that therefore collective action is
called for. Those resource economists with more faith in market processes ·
would be inclined to demur, and to insist that it be proven that collective action is really superior. They would ask us to consider at least one
16
possibility--a clearer definit io n of propert y rights so that consensual
bargainers mi gh t try to eliminate the undesirable conditions of the status
quo. Only as a last resort would they entertain the idea of some form of
regulation. This is as it should be; received doctrine in resource
economics has been too quick to assume that gove rnment rule making is the
only way to address resource problems.
But both groups of economists will be
~isled
if they believe that
public policy is motivated by a single-minded commitment to economic
efficiency. It is here that economists will need to make the greatest
break with their intellectual heritage. This does not mean that efficiency
is irrelevant. It only means that effiency as we define it is but one
dimension of
th~
public's interest in policy outcomes. I suggest that the
incidence of costs is a much more pertinent c0ncern. After all, people
cannot feel "efficiency"; they do feel unwanted costs.
It is here that economi sts often become moral advisors--paople
"should care" about efficiency, and if they don't we will try to convince
them of the errors of their ways . That is fine, but if economists disre gard--or dismiss as irrelevant --the incidence of costs then there is a
danger of being disregarded.
Economics seems to have a little bit of a "merit good" about it in
the sense that we often try to tell people what they should care about.
Over 40 years of academic preaching about the sundry abuses of proper
. ..
benefit-cost procedures by the several public-works agencies may have
purchased tenure for a number of aspiring scholars, but it has had only
minimal effect on the agenc i es or on the legislative process upon which
those agencies are so dependent. A meaningful economics of property rights
17
and economic incentives would be concerned with cost incidence of the
status quo, with the level and incidence of transaction costs, with the
institutional structure that fosters those costs, and with the pulling and
hauling that goes into defending the status quo - -as well as attempting to
alter that status quo. It would not require that we abandon any of our
science. But it does require that we build more pertinent analy tical
models where
ins~ t tutions
are variables rather than parameters . We do a
little of that now, but t here seems to be demand for more of it.
THE POLITICAL ECONOMY OF NATURAL RESOURCE USE
This entire program is about the political economy of resource use,
and an interest in the institutional aspects of natural resources--particular.ly property rights--i s certainly consistent with a political-economy
theme. Some
of the
~conomists
do~ain
may de spair that this takes resource economics out
of an objective science and into the soft and squishy world
of values and norms, power and politics. Indeed one could interpret the
mission of the "propert y r ights, public choice, Austrian" school of
~trlving
to keep resource allocations out of the political domain where
the " •.• lack of economic information forces the public land mana ger into
trading off in terms of political currencies, and this currency, at best,
provides distotted measure s of value [Anderson, p. 930)." Nowhere could
one find a more explicit statement of the central issue within resource
economics. Political tradeoffs distort measures of value--indeed.
I quickly recognize that to disagree with this charming statement
will place me i n a minority position among economists. But let us be clear
about the issue under consideration. To believe that the political process
18
distorts economic values--or those prices that would be given off from a
"pure" economic process--demands that we entertain thoughts about some
fictional world in which markets preceeded the state. The institutional
structure is fashioned out of whole cloth, and then--once defined--economic agents go about the business of maximizing collective happiness. It
is only when the legislative, admi nistrative, and judicial busybodies
arrive on the scene that the trouble begins.
The notion that there is a vi rgin market sys tem ur.3ullied by the
realities of life on earth is persistent among some cconomis ts--but alas
it is simply a dream. After all, what is the value of a ton of coal? Is it
that price in current markets--where certain offs ite cos ts go unaccounted
for? Is it some ether price after certain rtc! amation costs have been
paid? Who is to know?
The idea that there is some pure way ta allucate resources is too
funny to be taken seriously . There may indeec be opportunities for
introducing more market incentives into some administrative and judicial
prescriptions. But the
Am~rican
people seem to have spoken quite clearly
to the effect that not all natural resources should be
~ought
and sold. It
is, after all, one of the most fun damental o f social acts to determine
collectively which of our assets are not ·to become commodities. Do we
really believe that the prohibition of slavery dist o rted the economics of
0
cotton production in a way that warrants teeth- gnash ing about lost
.. -
"efficiency" ?
The political economy of natural resources will ensure itself of
being ignored if its practioners act as though they take seriously the
notion that the political process distorts "real" values. The political
19
system defines for us the institutional structure within which buying and
selling occurs. It has always been thus. One is tempted to ask those who
think otherwise to name an instant in human history when economic values
were "pure and correct."
•
Economic values--prices and costs--are derivative of the institutional structure that defines markets; change that structure . and you get a
different constellation of prices and costs. About thi9 there can be
little mystery. fhe hard pact comes when economists worry excessively
about which particular cons t ellation is the correct--or optimal--one. Such
contempiation will get us nowhere. What matters is that we admit the
legitim~cy
of the
politi~al
sys tem--as the operational . arm of our socie ty
--to define the institutional environment within which natural resource
use will occur. Some pa1t of the resource bas e will be allocated by
atomi8itic
b~rg~ining;
another part will not.
I believe that t hP. most promising areas of work for resource economists will be found within these two general domains, rather than attempt5.ng to establi s h the wrrc,ngheadedness of either. In the domain of marketed
resources we can help to improve the performance of those markets. Where
non-market proce sses operate we can al s o offer assistance in rationalizing
those alloca tions.
Margi~ality ,
private and social cos ts, intertemporal
implications, and t he incidence of transaction costs are all extremely
0
pertinent to an improved allocation process.
...
A necessary condition, however, is that we recognize the legitimacy
of the political process in the first instance. If that is impossible to
do, then the economist is relegated to a life of isolation from public
policy influence.
20
REFERENCES
••
Anderson, Terry L. 1982. "The New Resource Economics: Old Ideas
and New Applications" AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
64(Dec.):928-34.
Bhagwati, Jagdish. 1980. "Lobbying and Welfare" JOURNAL OF PUBLIC
ECONOMICS 14(Dec.) : 355-63.
Bhagwati, Jagdish. 1982 . "Directly Unproductive, Profit - Seeking (DUP)
Activities" JOURNAL OF POLITICAL ECONOMY 9U(~c.t . ):988 -1 002.
Bhagwati, Jagdish and T. N. Srinivasan. 1980 . "RevenuP. S~eking: A Generalization of the Theory of Tariffs" JOURNAL OF POLITICfl. ECONOMY
88(Dec .):1069-87.
Bromley, Daniel W. 1982. "Land and Water Problems; An Institutional
Perspective" AMERICAN JOURNAL OF AGRICULTURAL ~CO"rWMICS 64(Dec. ) : 83444.
Buchanan, James N. 1972. "Politics ~ Propert y and the Law: An Alternative
Interpretation of Miller, et. al. v. Schoene" JOURNAL OF LAW AND
ECONOMICS 15(0ct.):439-52.
Ciriacy-Wantrup, S.V. and Richard C. Bishop. 1975. '!Com.:non Property as a
Concept in Natural Resources Policy" HATITP..AL RESOURCES JOURNAL
lS(Oct.):713-27.
Krueger, Ann. 1974. "The Political Economy of· the Rent-Seeking Society"
AMERICAN ECONOMIC REVIEW 64(June):291- 303.
Samuels, Warren. 1984. "A Critique of Rent-Seeking Theory" i n NEOCLASSICAL
POLITICAL ECONOMY, ed. by David C. Colander, Cam~~idge, Mass.: Ballinger.
Samuels, Warren. 1971. "Interrelations Betwcer. Legal ~nd Economic Processes" JOURNAL OF LAW AND ECONOMICS 14(0ct.):435-SO .
.J
•
..
,
Samuels, Warren. 1972. "In Defense of a Positive Approach to Government as
an Economic Variable", JOURNAL OF LAW AND ECONOMICS 15(0ct.):453-59. ·