Dynamic Mechanism Design for a Global Commons

Rodrigo Harrison and Roger Lagunoff

No 442, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: 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.

Date: 2013
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https://www.economia.uc.cl/docs/doctra/dt-442.pdf (application/pdf)

Related works:
Journal Article: DYNAMIC MECHANISM DESIGN FOR A GLOBAL COMMONS (2017)
Working Paper: Dynamic Mechanism Design for a Global Commons (2014)
Working Paper: Dynamic Mechanism Design for a Global Commons (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:442

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