Events at CERGE-EI

Mathias Iwanowsky

IIES, Stockholm University, Sweden

Author: Mathias Iwanowsky

Abstract: This paper compares the effectiveness of two alternative property rights regimes to overcome the Tragedy of the Commons. One regime is to distribute access rights under public ownership, as proposed by Samuelson, the other is to sell land to generate private ownership as proposed by Coase. However, as property rights are not randomly allocated, causal evidence on the relative effectiveness of these two regimes is scarce. I exploit a spatial discontinuity generated by the 1934 Taylor Grazing Act, which created 20,000 miles of plausibly exogenous boundaries that separated publicly owned rangeland from open-access rangeland. I combine these boundaries with data on the timing of private-property sales to jointly estimate the effects of public and private ownership on resource exploitation and income in a spatial regression discontinuity design. Using satellite-based vegetation data, I find that both property rights regimes increased vegetation by about 10%, relative to the open-access control. Census-block-level income data reveals that public ownership raised private household income by 13% and decreased poverty rates by 18%. To study mechanisms, I exploit variation in pre-reform police presence and panel data on farm values, and show that legal enforcement through police presence is a necessary condition for the positive and long-lasting effects of both regimes to arise.

Full Text:  “Property Rights, Resources and Wealth: Evidence from a land reform in the United States”