fully transferable and could even be listed on the
work, see O'Toole, "Run Them Like Businesses."
stock exchanges. But if this is done, these special
mutual fund shares become equivalent to our
46. Gates, p. 515.
suggested public land shares, that is, each will rep-
47. Ibid., pp. 27073.
resent the same ultimate capital value and will
discount the same stream of future auction out-
48. Ibid., p. 438.
comes. One difference is that the mutual fund
would have to be managed by someone (also there
49. Ibid.
would be transactions costs in acquiring the
mutual fund portfolio), but if there is a market in
50. See, for example, Gates, pp. 50117; and "Land
mutual fund shares, such management would be
for Sale," Editorial, Wall Street Journal, January 25,
subjected to some market discipline. One of the
1982, p. 22.
authors (Smith) has argued elsewhere that the
fact that holding company (closed-end mutual
51. Charles Batten, "Toward a Free Market in Forest
fund) shares tend to sell for less than the market
Resources," Cato Journal 1, no. 2 (Fall 1981): 515.
value of their investment portfolio suggests that
the market discounts the value of anything that
52. The government can lease back military reser-
passes through an extra layer of such manage-
vations at market rates. If all governmental facili-
ment. See Vernon L. Smith, "The Measurement of
ties had to pay opportunity costs, the true cost of
Capital," in Measuring the Nation's Wealth, Studies in
such facilities would be included in current bud-
Income and Wealth, ed. John Kendrick, vol. 29 (New
gets, and land rentals could discipline facility
York: National Bureau of Economic Research,
location decisions. With that discipline, more
1964), pp. 34344.
defense might be obtained from a given budget by
The mutual fund, with marketable shares,
relocating bases that now occupy prime land sites.
might have greater popular appeal by virtue of its
greater familiarity.
53. Since rental fees have been increasing over
time, some provision for increases should perhaps
55. See S. J. Rassenti, V. L. Smith, and R. L. Bulfin,
be made. One possibility is for the obligations of
"A Combinatorial Mechanism for Airport Time
the holder of the grazing rights deed to include
Slot Allocation," Bell Journal of Economics, Autumn
provision for rent to be adjusted for inflation each
1982.
year. Alternatively, and less mechanically, the deed
terms might make some provision for reopening
56. Algorithms for this computation have been
negotiations on the lease terms every five years.
developed by S. J. Rassenti, "01 Decision Problems
We assume that provisions for changing fees are
with Multiple Resource Constraints: Algorithms
already part of the permit agreement between
and Applications," Ph.D. diss., University of
ranchers and government agencies. If so, these
Arizona, 1981.
contract provisions would be written into the
grazing rights deed. The operating rule in recog-
57. See William Vickrey, "Counterspeculation,
nizing "squatters' rights" should be to include in
Auctions, and Competitive Sealed Tenders,"
the deed no more and no less than those rights
Journal of Finance, March 16, 1961, pp. 837.
and obligations that are now part of what is the
recognized practice or legal arrangement between
58. Nelson, "How and Why to Transfer BLM Land
the agency and the squatter, or permit holder.
to the States," p. 14.
Should the deeded grazing rights be held in per-
petuity? It they are, this would seem to maximize
59. Information from the Nature Conservancy,
the incentive of the deed holder to maintain capi-
http://www.tnc.org/welcome/about/about.htm.
tal value by good range management practices.
60. Information from the National Audubon
54. An alternative to Provision 7 as a means of
Society, http://www.audubon.org/.
reducing the transactions costs associated with
the issuance of (and maintenance of a market in)
61. Jonathan Adler, "Balancing Oil Interests and
land shares: Instead of issuing land share certifi-
Ecology," Detroit News, July 19, 1991.
cates for bidding, let the bids be denominated in
U.S. currency. The proceeds of each auction
62. The Center for Private Conservation, a project
would then be deposited in a mutual fund to be
of the Competitive Enterprise Institute in
shared equally by all citizens. Each citizen would
Washington, D.C., has documented dozens of
be free to "cash out" of the fund at any time.
cases of local conservationists' banding together to
However, if this procedure is to take full advan-
protect sensitive ecosystems from development.
tage of the discipline of the market, fund share
For an index of those studies, see http://www.cei.org/
certificates should be issued in advance and be
cpc/index.html.
24