This economic analysis looks at the management of partially protected resource pools. The authors compare price- and quantity-based instruments to determine which instrument more efficiently regulated congestion spillovers between resource pools.
Researchers reframed and extended the mathematical model of de Meza and Gould to conduct their analysis. They focused their analysis on grazing land cross-resource congestion spillovers. Price-based instruments such as taxes are more efficient than quantity-based instruments like quotas when only some of the resources are enclosed. This analysis was based on grazing lands but could have broad applications to other natural resource pools, including fisheries, parks, antibiotics and wilderness areas.
While price and quantity instruments are equally efficient at managing resource pools when demand is perfectly elastic, price instruments are more efficient when some resources are enclosed.