Mining and Incentive Concession Contracts
AbstractThis paper studies the design of a mining concession contract as a multi-period autoselection problem where production is the depletion of a non renewable resource. As compared to symmetric information, we show that overproduction (resp. underproduction) is optimal in the initial phase (resp. terminal phase) of the resource extraction program. Also, asymmetric information lengthens the contract duration but reduces the scarcity rent. Finally, when there are several agents competing for contract bid, we show that optimal auctioning could be used to award the concession, assigning the lowest cost agent to carry out the extraction.
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Bibliographic InfoPaper provided by LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1 in its series Cahiers du LASER (LASER Working Papers) with number 2003.08.
Length: 23 pages
Date of creation: 2003
Date of revision:
Contact details of provider:
Postal: Université de Montpellier 1, Faculté des Sciences Economiques, LASER, Rue Raymond Dugrand - Espace Richter, CS 79606, 34960 Montpellier Cedex 2, France
Web page: http://www.laser.univ-montp1.fr
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ADVERSE SELECTION ; EXHAUSTIBILITY ; OVERPRODUCTION;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
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