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Mining and Incentive Concession Contracts

Author

Listed:
  • Hung, N.M.
  • Poudou, J.-C.
  • Thomas, L.

Abstract

This paper studies the design of a mining concession contract as a multi-period autoselection problem where production is the depletion of a non renewable resource. As compared to symmetric information, we show that overproduction (resp. underproduction) is optimal in the initial phase (resp. terminal phase) of the resource extraction program. Also, asymmetric information lengthens the contract duration but reduces the scarcity rent. Finally, when there are several agents competing for contract bid, we show that optimal auctioning could be used to award the concession, assigning the lowest cost agent to carry out the extraction.

Suggested Citation

  • Hung, N.M. & Poudou, J.-C. & Thomas, L., 2003. "Mining and Incentive Concession Contracts," Cahiers du LASER (LASER Working Papers) 2003.08, LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1.
    • Handle: RePEc:mop:lasrwp:2003.08
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    File URL: http://www.laser.univ-montp1.fr/Cahiers/cahier080203.pdf
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    More about this item

    Keywords

    ADVERSE SELECTION ; EXHAUSTIBILITY ; OVERPRODUCTION;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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