Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Optimal Resource Extraction A15-V2
Efficiency and sustainability often clash if limited-tenure use rights for renewable natural resources are rented to private resource managers. We introduce a mechanism reconciling these two issues for a stochastically developing natural resource. The mechanism selects the most patient and, thus, most sustainably harvesting resource manager in a second-price sealed-bid auction with minimum bids and it overcomes the incentive to mine the resource at the end of tenure by announcing a refund if a sustainability goal is obeyed. In addition, the mechanism ensures efficiency and is self-financing in expectation.
auctioning-refunding-mechanism efficiency renewable resource stochastic model sustainability