Wealth inequality and efficiency in the Commons, part II: the regulated case

Abstract

Does more inequality lead to more efficiency in the management of common property resources? To answer this question, an attempt is made to develop relevant theoretical models and to articulate them with empirical evidence drawn mainly from social science studies. The paper is divided into two parts. In this, the second part, it is shown that inequality tends to amplify the distributive effects of regulation when the latter is carried out through the use of second best instruments. As a result efficiency gains from regulation must decrease as inequality increases, for all users to gain from such regulation.