Congestion and the Commons: What Happens When Some Resources are Enclosed and Others are Open Access?

The Question

Are taxes and quotas effective tools to optimally manage partially owned resources, such as antibiotics?

What we found

When there are congestion spillovers in the case of partial ownership, price mechanisms are more efficient tools to promote optimal consumption.

Why it matters

Antibiotics can be viewed as a natural resource that is partially owned and partially public domain.  Inappropriate use of the drugs speeds up the development of resistance, so it is important for regulators to consider policies to encourage appropriate antibiotic use.