Property rights regimes and the management of resources

Abstract

The property rights regime is an important link between the yield of a natural resource and the appropriation and maintenance incentives of its users. This paper discusses the theoretical background for this link and provides insights as to the function of the property rights regime, drawing from recent developments in the economics literature on optimal ownership patterns and the theory of repeated games. the performances of different resource ownership patterns are evaluated using ghe criterion of economic efficiency. The economic theory of property rights is based on the idea that, because contractual arrangements are bound to be incomplete, there is scope for opportunistic behavviour and therefore the resulting resource management is likely to be inefficient. Optimal resource ownership patterns are viewed as solutions to the problem of structuring private users' incentives in accordance with the socially desirable management of resources.