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Voracious Transformation Of A Common Natural Resource Into Productive Capital

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  • Frederick van der Ploeg

Abstract

I analyze a power struggle where competing factions have "private" financial assets and deplete a "common" stock of natural resources with no private property rights. I obtain a feedback Nash equilibrium to the dynamic common-pool problem and obtain political variants of the Hotelling depletion rule and the Hartwick saving rule. Resource prices and depletion occur too fast, so substitution away from resources to capital occurs too fast and the saving rate is too high. The power struggle boosts output, but depresses sustainable consumption. Genuine saving is nevertheless zero in a fractionalized society. World Bank estimates may be too optimistic. Copyright (2010) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 51 (2010)
Issue (Month): 2 (05)
Pages: 365-381

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Handle: RePEc:ier:iecrev:v:51:y:2010:i:2:p:365-381

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Cited by:
  1. Frederick Van der Ploeg & Dominic Rohner, 2010. "War and Natural Resource Exploitation," CESifo Working Paper Series 3244, CESifo Group Munich.
  2. Eisenkopf, Gerald, 2014. "The impact of management incentives in intergroup contests," European Economic Review, Elsevier, vol. 67(C), pages 42-61.
  3. Eisenkopf, Gerald, 2013. "Management Impact in an Experimental Intergroup Contest," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79863, Verein für Socialpolitik / German Economic Association.
  4. Caruso, Raul, 2012. "Differentials in Property Rights in a two sector-economy," NEPS Working Papers 2/2012, Network of European Peace Scientists.
  5. van der Ploeg, Frederick, 2008. "Why Do Many Resource-Rich Countries Have Negative Genuine Saving? Anticipation of Better Times or Rapacious Rent Seeking," CEPR Discussion Papers 7021, C.E.P.R. Discussion Papers.
  6. Frederick van der Ploeg, 2009. "Rapacious Resource Depletion and Excessive Investment Fuelled by Rival Factions and Insecure Property Rights," OxCarre Working Papers 016, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  7. Frederick Van der Ploeg, 2010. "Natural Resources: Curse or Blessing?," CESifo Working Paper Series 3125, CESifo Group Munich.
  8. Puzon, Klarizze, 2013. "Cost-reducing R&D in the presence of an appropriation alternative: an application to the natural resource curse," EconStor Preprints 71189, ZBW - German National Library of Economics.
  9. Thampanishvong Kannika, 2012. "Provision of Public Goods with the Presence of Inter-Class Conflicts," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(1), pages 1-29, April.
  10. Corneo Giacomo, 2011. "Stakeholding as a New Development Strategy for Saudi Arabia," Review of Middle East Economics and Finance, De Gruyter, vol. 7(1), pages 1-19, May.
  11. Frederick Van der Ploeg, 2010. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights," CESifo Working Paper Series 2981, CESifo Group Munich.
  12. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," TWI Research Paper Series 87, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  13. Jérémy LAURENT-LUCCHETTI & Marc SANTUGINI, 2010. "Ownership Risk and the Use of Common-Pool Natural Resources," Cahiers de recherche 10-03, HEC Montréal, Institut d'économie appliquée, revised May 2011.
  14. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-26, Department of Economics, University of Konstanz.
  15. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.

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