On the Redistributive Impact of Privatizing a Resource Under Imperfect Enforcement
22 Pages Posted: 23 Dec 2003
Date Written: May 2003
We consider the redistributive effects of privatizing a resource previously exploited under free access. We assume that illegal extraction is punished but that the sanction is bounded by individual's wealth. First, we show that a segment of intermediate-wealth individuals is the most adversely affected from the regime change, while the poorest segment is not only less severely affected, but may actually gain from it. Next, we show how the authorities may prefer to choose an intermediate enforcement level in order to maximizes the political acceptability of the regime switch among the local community.
Keywords: Property rights, enforcement, wealth distribution, natural resources, illegal extraction
JEL Classification: D78, K42, O13, O17, Q21
Suggested Citation: Suggested Citation