Low, High and Super Congestion of an Open-Access Natural Resource: The Autarky Case

IZA DP No. 13652 SEPTEMBER 2020 Low, High and Super Congestion of an Open-Access Natural Resource: The Autarky Case* Production of commodities based on open-access renewable natural resources (NR) has usually been examined under “low” congestion (LC) – where MC > AC and both increase with output. I identify two additional congestion categories, “high” (HC) and “super” (SC) congestion – where AC is backward-bending and MC < 0. Using a general equilibrium model, I derive the open-access impact on steady-state welfare, NR, sectoral employment, output and price, relative to optimal regulation. The main findings are: i) Welfare and NR losses under SC (HC) are one or more orders-of-magnitude greater (between a multiple and one or more orders-of-magnitude greater) than under LC; ii) These results are robust to alternative parameter values and functional forms, raising confidence in them and thus in regulation’s importance; iii) One such regulation, an optimal tax, raises (reduces) the commodity’s output and reduces (raises) its price under SC (LC and HC), generating significantly larger gains under SC. A companion piece examines the issue under openness to trade, showing that, though an increase in population unambiguously worsens openaccess NR and welfare under autarky, this need not be the case under trade. JEL Classification: D62, F18, Q22, Q27, Q56

• Publication year

  2020

• Venue

  Social Science Research Network

• Publication date

  Unknown publication date

• Fields of study

  Not labeled

• Identifiers
  DOI 10.2139/ssrn.3687128
• External record

  Open on Semantic Scholar

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  Semantic Scholar

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