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Managing a common renewable resource in asymetric information

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  • D. Fuentes
  • P.-A. Jayet
  • Gilles Rotillon

Abstract

The clear definition of property rights is not a sufficient condition to prevent congestion effects in commons. In this paper we present how interesting can be the coordination among owners in the preservation of the common good. Our approach takes into account economic dynamics and incentive mechanisms in a hidden information context. We consider a natural resource which is being used up for a continuum of producers on a common property regime. We also consider that each producer has an individual performance index which is a hidden information of the rest of players. We introduce coordination in the sense of a global maximization of the joint profit. If there is no coordination among the producers, their behavior leads to complete rent dissipation. We focus our model in the case of the producers convinced to coordinate their actions in order to preserve their own economic sustainability. Under perfect information we find that the exclusion of at subset of producers can appear and how it is endogenously determined. Under asymmetric information we propose a quantity-transfer contract which lead us to the previous stationary disposal stock of the resource without exclusion.
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Suggested Citation

  • D. Fuentes & P.-A. Jayet & Gilles Rotillon, 2003. "Managing a common renewable resource in asymetric information," THEMA Working Papers 2003-18, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  • Handle: RePEc:ema:worpap:2003-18
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    References listed on IDEAS

    as
    1. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    2. Bourgeon, Jean-Marc & Jayet, Pierre-Alain & Picard, Pierre, 1995. "An incentive approach to land set-aside programs," European Economic Review, Elsevier, vol. 39(8), pages 1487-1509, October.
    3. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
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    Cited by:

    1. Fuentes Castro, Daniel, 2005. "Incentivos en selección adversa para el control del acceso a espacios naturales protegidos
      [Incentives under adverse selection for the management of natural protected spaces]
      ," MPRA Paper 51754, University Library of Munich, Germany.

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