APPROPRIABLE RENTS FROM YELLOWSTONE PARK - A CASE OF INCOMPLETE CONTRACTING

The history of Yellowstone Park is best understood in the context of t he theory of the firm as developed by Armen Alchian. In the late ninet eenth century, the Northern Pacific Railroad recognized the potential amenity rents from Yellowstone and captured them by vertically integra ting ifs monopoly on transportation to the region with the supply of t ourist facilities in the park. This gave the railroad de facto ownersh ip of the park that lasted until automobiles were allowed to enter in 1915. Thereafter the tragedy of the commons ensued and rents were diss ipated instead of maximized.