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Principal-agent relationship in resource management, multiple principals and spatial dynamics

Author

Listed:
  • Philippe Delacote

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech
    Climate Economic Chair)

  • Arnaud Dragicevic

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech
    Chaire Forêts pour Demain, Agro ParisTech–Office National des Forêts)

  • Serge Garcia

    (Laboratoire d'Economie Forestière, INRA - AgroParisTech)

Abstract

Public authorities (often local) frequently mandate public or private agencies to manage their natural resources. Contrary to the agency, which is an expert in resource management, public authorities usually do not know the sustainable harvest level. In this paper, we model the contractual relationship between a principal, who owns the resource, and an agent, who holds private information on its sustainable harvest level, and look for the Pareto-optimal allocations. The agent can strategically use his private information to harvest outside the sustainability interval. We consider the case where the agent simultaneously interacts with several principals. From a simple dynamic spatial game, we show how the existence of multiple interacting principals with diverse qualities on information can help the least wellinformed principals to reduce the information rent and lead to the Pareto-optimal allocation.

Suggested Citation

  • Philippe Delacote & Arnaud Dragicevic & Serge Garcia, 2014. "Principal-agent relationship in resource management, multiple principals and spatial dynamics," Working Papers - Cahiers du LEF 2014-10, Laboratoire d'Economie Forestiere, AgroParisTech-INRA, revised Oct 2014.
    • Handle: RePEc:lef:wpaper:2014-10
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    File URL: http://www6.nancy.inra.fr/lef/Cahiers-du-LEF/2014/2014-10
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    Keywords

    Resource management; Sustainable harvesting; Principal-agent model; Spatial dynamics;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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