It is well-known that the management of common property resources tends to be inefficient when the resource is scarce. On the other hand, it has also been shown that privatization of a resource previously held under common property leads to increasing inequality and poverty if the profits from privatization are not shared among all the erstwhile rightsholders. As a consequence, a tradeoff exists between efficiency and equity. Furthermore, in a world of uncertainty and incomplete intertemporal markets, privatization of a common property resource may remove the insurance benefits that poor resource users were previously deriving from the joint exploitation of this resource. The efforts under this research project are essentially theoretical.
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