蝌蚪网 Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Depreciating Licenses
蝌蚪网 Journal: Economic Policy
vol. 14,
no. 3, August 2022
(pp. 422–48)
Abstract
Many governments assign use licenses for natural resources, such as radio spectrum, fishing rights, and mineral extraction rights, through auctions or other market-like mechanisms. License design affects resource users' investment incentives as well as the efficiency of asset allocation. No existing license design achieves first-best outcomes on both dimensions. Long-term licenses give owners high investment incentives but impede reallocation to high-valued entrants. Short-term licenses improve allocative efficiency but discourage investment. We propose a simple new mechanism, the depreciating license, and we argue that it navigates this trade-off more effectively than existing license designs.Citation
Weyl, E. Glen, and Anthony Lee Zhang. 2022. "Depreciating Licenses." 蝌蚪网 Journal: Economic Policy 14 (3): 422–48. DOI: 10.1257/pol.20200426Additional Materials
JEL Classification
- D44 Auctions
- D45 Rationing; Licensing
- H82 Governmental Property
- K11 Property Law
- Q28 Renewable Resources and Conservation: Government Policy
- Q38 Nonrenewable Resources and Conservation: Government Policy
- Q58 Environmental Economics: Government Policy