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Contracts for the Management of a Non-Renewable Resource under Asymmetric Information and Structural Price Breaks

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  • David Martimort
  • Jerome Pouyet
  • Francesco Ricci

Abstract

We characterize the optimal contract for resource extraction in a context where the concessionaire has private information on the initial stock of resource. The dynamics of extraction is characterized by a virtual Hotelling rule in which costs of extraction are replaced with virtual costs of extraction. We analyze how structural breaks in the price of resource impact the dynamics of extraction. JEL Codes: Q31, D82. Keywords: Non-Renewable Resource Management, Delegated Management, Optimal Contract, Asymmetric Information.

Suggested Citation

  • David Martimort & Jerome Pouyet & Francesco Ricci, 2018. "Contracts for the Management of a Non-Renewable Resource under Asymmetric Information and Structural Price Breaks," Annals of Economics and Statistics, GENES, issue 132, pages 81-103.
  • Handle: RePEc:adr:anecst:y:2018:i:132:p:81-103
    DOI: 10.15609/annaeconstat2009.132.0081
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    References listed on IDEAS

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    1. Jean-Christophe Poudou & Lionel Thomas, 2000. "Concession minière et asymétrie d'information," Économie et Prévision, Programme National Persée, vol. 143(2), pages 129-138.
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    8. David Martimort & Jérôme Pouyet & Francesco Ricci, 2018. "Extracting information or resource? The Hotelling rule revisited under asymmetric information," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 311-347, June.
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    Cited by:

    1. David Martimort & Jérôme Pouyet & Francesco Ricci, 2018. "Extracting information or resource? The Hotelling rule revisited under asymmetric information," RAND Journal of Economics, RAND Corporation, vol. 49(2), pages 311-347, June.

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    More about this item

    Keywords

    Non-Renewable Resource Management; Delegated Management; Optimal Contract; Asymmetric Information.;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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