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Spatial concessions with limited tenure

Author

Listed:
  • Christopher Costello

    (Bren School of Environmental Science & Management - UC Santa Barbara - University of California [Santa Barbara] - UC - University of California)

  • Nicolas Quérou

    (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, CNRS - Centre National de la Recherche Scientifique)

  • Agnès Tomini

    (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UPVM - Université Paul-Valéry - Montpellier 3 - INRA - Institut National de la Recherche Agronomique - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier)

Abstract

We examine theoretically a system of spatial property rights over a mobile re- newable resource. The resource grows and is harvested in each area, but harvest in one patch imposes an externality on other patches through resource movement. This externality gives rise to over-extraction by non-cooperative patch owners. We propose a new institutional arrangement to internalize this externality. The in- strument involves granting limited-duration tenure, with the possibility of renewal, to each of the N interconnected concessionaries. Renewal of concession i is predi- cated on concessionaire i having never driven the stock below a pre-defined target Si. We show that not only can this instrument improve upon the decentralized property right solution, but under general conditions it can replicate the socially optimal extraction in every patch and every time period, in perpetuity. The dura- tion of tenure and the dispersal of the resource play pivotal roles in whether this instrument achieves socially optimal resource use over time.

Suggested Citation

  • Christopher Costello & Nicolas Quérou & Agnès Tomini, 2015. "Spatial concessions with limited tenure," Post-Print hal-01658863, HAL.
    • Handle: RePEc:hal:journl:hal-01658863
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