Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/102364
Authors: 
Krings, Hanna
Year of Publication: 
2014
Series/Report no.: 
Joint Discussion Paper Series in Economics 34-2014
Abstract: 
This paper analyzes resource partnerships and their influence on the environmental quality in a resource-rich country by introducing incomplete contracts, imperfect property rights protection, and a lack of valuation for the environment by the government in the South. Employing numerical simulations, I determine the equilibrium extraction rate, the applied extraction technology, and the environmental quality in dependence of the state of democracy in the resource-rich country. In contrast to what one might expect, under certain circumstances it can be environmentally beneficial to have incomplete contracts that induce the utilization of a suboptimal technology for resource extraction. Further, reducing the holdup problem by shifting bargaining power to the North, is only desirable if the environmental quality increases with a better extraction technology.
Subjects: 
Resource Extraction
Environment
North-South Trade
JEL: 
F18
Q37
Q56
Document Type: 
Working Paper

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