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Dynamic Mechanism Design for a Global Commons

Rodrigo Harrison and Roger Lagunoff
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Rodrigo Harrison: Instituto de Economia. Pontificia Universidad Católica de Chile.

Working Papers from Georgetown University, Department of Economics

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. We show that this is true even when private information is negligible.

Keywords: Dynamic mechanism design; global commons; climate change; optimal quota; full compression; fish wars; Perfect Bayesian equilibria; international agency. (search for similar items in EconPapers)
JEL-codes: C73 D82 F53 Q54 Q58 (search for similar items in EconPapers)
Pages: 46
Date: 2013-09-15, Revised 2014-11-14
New Economics Papers: this item is included in nep-cta, nep-ene and nep-env
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: DYNAMIC MECHANISM DESIGN FOR A GLOBAL COMMONS (2017) Downloads
Working Paper: Dynamic Mechanism Design for a Global Commons (2013) Downloads
Working Paper: Dynamic Mechanism Design for a Global Commons (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~13-13-06

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Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036
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