Can Privatization Be Inefficient?: The Case of the Chesapeake Bay Oyster Fishery

The efficiency of private property over alternative property rights structures has been a central focus of natural resource economics since Gordon's article [1954]. The "tragedy" of common property was later popularized by Hardin [1968]. Gordon used a fishery as an example of a common property resource that would be more efficiently managed if privatized. In his model, a common property rights structure results in the attraction of labor and capital, which could earn a greater return elsewhere in the economy and in the dissipation of resource rents. Conversely, with private property, resource rents are maximized, and labor and capital are released to earn equal or greater returns in alternative employment. In this analysis, Gordon used only two categories of property rights: private property and common property. This twopart classification, and the resulting conclusion about the efficiency of the alternative rights structures, has been widely adopted in the economics literature.1 Over time, the central theme of this literature has become prescriptive. Economists advocate the social superiority of private property rights arrangements and support state actions to