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Dynamic Mechanism Design for a Global Commons


  • Rodrigo Harrison
  • Roger Lagunoff


We model dynamic mechanisms for a global commons. Countries benefit from both consumption and aggregate conservation of an open access resource. A country's relative value of consumption-to-conservation is privately observed and evolves stochastically. An optimal quota maximizes world welfare subject to being implementable by Perfect Bayesian equilibria. With complete information, the optimal quota is first best; it allocates more of the resource each period to countries with high consumption value. Under incomplete information, the optimal quota is fully compressed - initially identical countries always receive the same quota even as environmental costs and resource needs differ later on.

Suggested Citation

  • Rodrigo Harrison & Roger Lagunoff, 2013. "Dynamic Mechanism Design for a Global Commons," Documentos de Trabajo 442, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:442

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    References listed on IDEAS

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    Cited by:

    1. Rodrigo Harrison & Roger Lagunoff, 2015. "Tipping Points and Business-as-Usual in a Global Carbon Commons," Levine's Working Paper Archive 786969000000001019, David K. Levine.
    2. Rodrigo Harrison & Roger Lagunoff, 2015. "Tipping Points and Business-as-Usual in a Global Carbon Commons," Documentos de Trabajo 458, Instituto de Economia. Pontificia Universidad Católica de Chile..

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    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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