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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.

Suggested Citation

  • Frederick van der Ploeg, 2010. "Voracious Transformation Of A Common Natural Resource Into Productive Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(2), pages 365-381, May.
    • Handle: RePEc:ier:iecrev:v:51:y:2010:i:2:p:365-381
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    Cited by:

    1. Aronsson, Thomas & Johansson-Stenman, Olof, 2014. "Genuine Saving and Conspicuous Consumption," Umeå Economic Studies 900, Umeå University, Department of Economics.
    2. Benchekroun, H. & Ray Chaudhuri, A., 2010. "'The Voracity Effect' and Climate Change : The Impact of Clean Technologies," Discussion Paper 2010-97, Tilburg University, Center for Economic Research.
    3. Tenryu, Yohei, 2013. "The Role of the Private Sector under Insecure Property Rights," MPRA Paper 74893, University Library of Munich, Germany, revised 27 Oct 2016.
    4. van der Ploeg, Frederick, 2010. "Why do many resource-rich countries have negative genuine saving?: Anticipation of better times or rapacious rent seeking," Resource and Energy Economics, Elsevier, vol. 32(1), pages 28-44, January.
    5. Laurent-Lucchetti, Jérémy & Santugini, Marc, 2012. "Ownership risk and the use of common-pool natural resources," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 242-259.
    6. S. Kostyunin & A. Palestini & E. Shevkoplyas, 2014. "On a Nonrenewable Resource Extraction Game Played by Asymmetric Firms," Journal of Optimization Theory and Applications, Springer, vol. 163(2), pages 660-673, November.
    7. van der Ploeg, Frederick & Rohner, Dominic, 2012. "War and natural resource exploitation," European Economic Review, Elsevier, vol. 56(8), pages 1714-1729.
    8. Klarizze Anne Martin Puzon, 2013. "Cost-Reducing R&D in the Presence of an Appropriation Alternative: An Application to the Natural Resource Curse," Working Papers 2013.30, Fondazione Eni Enrico Mattei.
    9. Raul Caruso, 2012. "Differentials in property Rights in a two-sector economy," Revue d'économie politique, Dalloz, vol. 122(2), pages 257-278.
    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. 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.
    12. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    13. Ngo Van Long & Fabien Prieur & Klarizze Puzon & Mabel Tidball, 2013. "Markov Perfect Equilibria in Differential Games with Regime Switching Strategies," Working Papers 13-06, LAMETA, Universtiy of Montpellier, revised Jan 2014.
    14. repec:elg:eechap:14605_1 is not listed on IDEAS
    15. Eisenkopf, Gerald, 2014. "The impact of management incentives in intergroup contests," European Economic Review, Elsevier, vol. 67(C), pages 42-61.
    16. Gerald Eisenkopf, 2013. "The Impact of Leadership Incentives in Intergroup Contests," Working Paper Series of the Department of Economics, University of Konstanz 2013-06, Department of Economics, University of Konstanz.
    17. 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.
    18. Yohei Tenryu, 2017. "The role of the private sector under insecure property rights," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 64(3), pages 285-311, September.
    19. Gerald Eisenkopf, 2013. "The Impact of Management Incentives in Intergroup Contests," TWI Research Paper Series 87, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    20. 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.
    21. Frederick Ploeg, 2011. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights: A Puzzle," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(1), pages 105-128, January.
    22. Eisenkopf, Gerald, 2013. "Management Impact in an Experimental Intergroup Contest," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79863, Verein für Socialpolitik / German Economic Association.
    23. Frederick Van der Ploeg, 2010. "Rapacious Resource Depletion, Excessive Investment and Insecure Property Rights," CESifo Working Paper Series 2981, CESifo.

    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development

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