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Linked Common-Property Resources with Congestion Externalities
RFF Internal Seminar
Presenter
Jonathan Edward Hughes, University of Colorado Boulder
Abstract
In the management of natural resources or in the provision of services such as public healthcare or transportation where consumption is rival and non-excludable, we expect open-access to result in inefficient over-consumption. In this paper, we show that in a case where users choose between substitute resources and consumption levels depend on differences in fixed access-costs and congestion, common-property resources can be either over or under-consumed. The intuition for this result comes from the fact that differences in access costs can lead to higher levels of congestion for some resources. Shifting users from low to high access cost goods may lower total congestion and reduce social costs. An important implication of this result is that it may be socially optimal to encourage consumption of some common-property resources. We show that whether resources are over or under-consumed depends on the extent to which lower congestion increases total consumption via induced demand effects. To investigate the importance of our theoretical predictions, we apply our analytical model to a specific example, highway travel and carpooling in high-occupancy vehicle (HOV) lanes in Los Angeles. We find that HOV lanes are under-consumed at induced demand levels consistent with short-run driver behavior and over-consumed in the longer run. On average, increasing HOV lane use raises the present value of aggregate social cost for every route we study.
Date
Friday, May 10, 2013
3:00 - 4:00 p.m.
Location
Resources for the Future
Room 563 C
1616 P St. NW
Washington, DC 20036
All seminars will be in the 7th Floor Conference Room at RFF, unless otherwise noted. 1616 P Street NW. Attendance is open, but involves pre-registration no later than two days prior to the event. For questions and to register to an event, please contact Khadija Hill at khill@rff.org (tel. 202-328-5174). Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.
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