Re: update on selling the oceans

Topics: Resources
10 Apr 1995

From: "DG Ervan Darnell"

> [ An initial poor assignment of lots of fishing banks would cause people to
> want to buy small lots and avoid large ones, waiting for the buyout which
> equalizes the value. ]
>Not that it couldn't work, but it is hardly the clean functioning of the
>classic invisible hand market mechanisms

I don't see any reason why the conversion I outlined would not happen
immediately after making the fishing banks property. The only problem is
that the government might foolishly sell improperly sized lots which would
have the effect of being a handout to whoever bought them, before being sold
to the ultimate, rational purchaser. That hardly seems like a market
failure to me. I suppose one could really back it up and say the same sort
of problems existed with settling the West, etc. Yes, initial allocations
of property are often goofed. That's true, but that is in some sense
outside of market mechanisms, by definition. The important thing is simply
that the property right be recognized & respected once granted and the
problem will solve itself from thereon.

>When Greenway Plaza put together a large block of residential land, they had
>to pay millions to the last few holdouts.

The simultaneous purchase problem is a distinct issue here from the question
of their being rational interest in one person collecting the whole resource
(and the original example was carefully drawn for two owners and not two