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Informal insurance in renewable resource harvesting


  • Rabindra Nath Chakraborty


A general equilibrium model is presented where a small number of resource users share part of their harvests with each other. As the productivity of resource harvest is stochastic, the sharing rule can be interpreted as an informal insurance contract. As individual labour inputs are unobservable, an exogenous increase in the insurance premium causes individuals to expend less effort on harvesting. However, the resulting inefficiency is reduced by an increase in the expected long-run level of the resource stock. A second-best efficient level of sharing exists, which is positive but smaller than the first-best level if the resource stock per capita is small. Copyright 2002, Oxford University Press.

Suggested Citation

  • Rabindra Nath Chakraborty, 2002. "Informal insurance in renewable resource harvesting," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(2), pages 219-236, June.
  • Handle: RePEc:oup:erevae:v:29:y:2002:i:2:p:219-236

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