57 
ipating exploitation would have nothing to gain by this approach. Since not 
more than a handful of nations are likely to have bonafide interests in exploita- 
tion, the opposition to the flag nation approach would indeed be heavy. 
C. An International Registry Office—Certain modifications of the flag nation 
approach have been suggested aS ways of avoiding some of the above difiiculties. 
One of these is the establishment of an international registry office and the 
other would add to this, a provision for the distribution of a share of the revenue 
to the UN. 
Both of these suggestions call for some form of international agreement and 
might be considered as falling somewhere between the flag nation approach and 
that of an international authority. 
L.F.E. Goldie has stated that “the main policy goals of secure title, limited 
access to a resource to insure that prevention of over-capitalization, overproduc- 
tion and congestion, and the avoidance of ‘first come first served’ tactics and 
tho ensuing conflicts, could be gained if regional agencies (with, necessarily, a 
central index in the United Nations Secretariat) could be established to carry 
out evidentiary (notice) and recording functions.” ** Like the flag-nation ap- 
proach, the initiative would lie with the entrepreneur. He would record his claim 
with his country, and his country would the record its international claim to 
exercise jurisdiction and control over the individual’s (or enterprise’s) activity 
with the (recording) agency.” “ The agency ‘“‘would have power to issue instru- 
ments defining the recording state’s Zone of Special Jurisdiction.” The zone of 
jurisdiction would be limited with respect to purpose, duration, area, and time 
in which to prove development. 
An effective regime of this sort would provide more security of title than a 
flag nation regime. Over-capitalization and congestion, as a cousequence of 
common property (as in fisheries) would automatically be avoided by the estab- 
lishment of the exclusive rights. However, it is difficult to see how this regime 
would operate on anything but a “first come, first served” basis, and it would 
tend to stimulate overproduction rather than avoid it. 
That the exclusive rights would go to the first entrepreneur to record them, is 
not, of itself, necessarily undesirable. However, as pointed out in the discussion 
of criteria, this technique provides no means for resolving conflict when two or 
more entrepreneurs are in competition for the same or overlapping zones. And 
such conflicts are likely to become common, particularly in view of the magnitude 
of the area that an entrepreneur would require and the (presumed) scarcity of 
valuable sites. Furthermore, assuming the claims are non-transferable, the first 
to record would not necessarily be the most efficient producer. In the Cherokee 
Strip, the rewards went to owners of the fastest horses, not the best farmers. 
The losers are not only those that might be best equipped to exploit the resources, 
but also society in that less productive units of capital and labor may be em- 
ployed. If the claims are transferable, and the claim holder can market his rights, 
then the race is on. An entrepreneur has little to lose by recording a claim, and 
may make a lucky strike. 
In addition, the performance requirement (‘“‘use it or lose it’’) would tend to 
stimulate excessively rapid rates of output. Those who had recorded claims 
would have the incentive to produce even though net returns were inadequate or 
negative, since they might lose the claim by not producing. All of these (and 
other) difficulties refiect the fact that the property (the exclusive right) may be 
acquired at a cost that does not approximate its value to the holder—that there 
is no market by which the value of the property can be expressed and which can 
be used as a method for allocating eapital and labor. While the thought of these 
inefficiencies may be painful only to an economist, the results of non-market allo- 
cation of rights may be painful to all. 
In terms of the acceptability of such a regime, the same questions might be 
asked that were asked of the flag nation alternative. In order to get around this, 
it has been suggested that a certain portion of the revenues of production be 
devoted to some international purpose. The revenue could be acquired by license 
fee, income tax, yield tax, or royalty. This presumes, of course, that there is 
some form of international authority that has the ability to extract revenues. It 
goes beyond Goldie’s recording agency (that would apply only to the signatories 
of his proposed convention) and would apply to all exploitation beyond the limits 
of the coastal states. The collection agency might be the United Nations, some 
°8 Goldie, op. cit., p. 280. Emphasis in original. 
27 Tbid., p. 281. 
2% This would not be true for oil, if the rights did not fully cover the pool. 
