A Montero auction mechanism for regulating unobserved use of the commons

TY - UNPB

T1 - A Montero auction mechanism for regulating unobserved use of the commons

AU - Hansen, Lars Gårn

PY - 2015

Y1 - 2015

N2 - Regulating externalities from the use of common resources is often hampered by the regulator’s inability to accurately observe individual firms’ resource use. Allocating resource use through taxes on aggregate use, which often can be observed, has been suggested (Segerson, 1988); however, these taxes are vulnerable to collusion and strategic behavior and they generate inefficient entry-exit incentives. To address these disadvantages, I suggest using a Montero (2008)-type auction mechanism to allocate licenses for unobserved use of common resources and to induce compliance with these licenses through an enforcement tax on the differences between aggregated licenses issued and observed aggregated resource use.

AB - Regulating externalities from the use of common resources is often hampered by the regulator’s inability to accurately observe individual firms’ resource use. Allocating resource use through taxes on aggregate use, which often can be observed, has been suggested (Segerson, 1988); however, these taxes are vulnerable to collusion and strategic behavior and they generate inefficient entry-exit incentives. To address these disadvantages, I suggest using a Montero (2008)-type auction mechanism to allocate licenses for unobserved use of common resources and to induce compliance with these licenses through an enforcement tax on the differences between aggregated licenses issued and observed aggregated resource use.

M3 - Working paper

T3 - IFRO Working Paper

BT - A Montero auction mechanism for regulating unobserved use of the commons

PB - Department of Food and Resource Economics, University of Copenhagen

CY - Frederiksberg

ER -