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Exploiting Common Resources with Capital-Intensive Technologies: The Role of External Forces

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  • Engel, Stefanie
  • Lopez, Ramon E.

Abstract

This paper focuses on the interactions between local communities having at least some degree of informal claims over natural resources and external agents, particularly firms interested in commercial resource exploitation. The paper makes three contributions to the existing literature. First, unlike the literature on devolution and communal resource management, rather than concentrating on intra-community decisions, we extend the analysis to examine interactions between the community and outside agents. Second, unlike both the literature on conflict and bargaining, we integrate these two strands of the literature, so that we can endogenously derive the conditions under which community-firm interactions result in conflict or, alternatively, in bargaining agreements. Third, to the best of our knowledge, this is the first study that formally models the endogenous participation by third parties that may attempt to support communities in the process. We show that, in a context of weak property rights, improvements in the community's bargaining power vis-á-vis the firm are likely to increase resource extraction and thereby harm the environment. Moreover, an increase in the wage rate may increase or decrease resource extraction depending on initial conditions.

Suggested Citation

  • Engel, Stefanie & Lopez, Ramon E., 2004. "Exploiting Common Resources with Capital-Intensive Technologies: The Role of External Forces," Discussion Papers 18720, University of Bonn, Center for Development Research (ZEF).
  • Handle: RePEc:ags:ubzefd:18720
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    File URL: http://ageconsearch.umn.edu/record/18720/files/dp040090.pdf
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    Cited by:

    1. Engel, Stefanie & Palmer, Charles, 2008. "Payments for environmental services as an alternative to logging under weak property rights: The case of Indonesia," Ecological Economics, Elsevier, vol. 65(4), pages 799-809, May.
    2. Stefanie Engel & Ramón López & Charles Palmer, 2006. "Community–Industry Contracting over Natural Resource use in a Context of Weak Property Rights: The Case of Indonesia," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 73-93, January.
    3. López, Ramón, 2010. "Global economic crises, environmental-resource scarcity and wealth concentration," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    4. Stefanie Engel & Charles Palmer, 2011. "Complexities of Decentralization in a Globalizing World," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(2), pages 157-174, October.

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    Keywords

    Resource /Energy Economics and Policy;

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