Ownership Risk and the Use of Common-Pool Natural Resources

Jérémy Laurent-Lucchetti and Marc Santugini ()
Additional contact information
Marc Santugini: IEA, HEC Montréal, http://www.hec.ca/iea/

No 10-03, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: It has long been recognized that the quality of property rights greatly impacts the economic development of a country and the use of its natural resources. Since Long (1975), the conventional wisdom has been that ownership risk induces a firm to overuse the stock of a resource. However, the empirical evidence is mixed. In particular, Bohn and Deacon (2000) finds that weak property rights have an ambiguous effect on present extraction. We provide a theoretical model supporting these mixed observations in a common-pool resource environment. We show that if ownership risk includes a risk of expropriation in which the identities of the excluded firms are unknown ex ante, then the present extraction of all firms may decrease along with a higher risk of expropriation. The elasticity of demand for the resource is key in explaining the effect of ownership risk on present extraction.

Keywords: Common-pool resource; Expropriation; Extraction behavior; Ownership risk; Property rights; Tragedy of the commons. (search for similar items in EconPapers)
JEL-codes: D21 D23 D92 Q30 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2010-07, Revised 2011-05
New Economics Papers: this item is included in nep-env
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.hec.ca/iea/cahiers/2010/iea1003_msantugini_v3.pdf (application/pdf)

Related works:
Journal Article: Ownership risk and the use of common-pool natural resources (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iea:carech:1003

Ordering information: This working paper can be ordered from
Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7

The price is Free.

Access Statistics for this paper

More papers in Cahiers de recherche from HEC Montréal, Institut d'économie appliquée Institut d'économie appliquée HEC Montréal 3000, Chemin de la Côte-Sainte-Catherine Montréal, Québec H3T 2A7. Contact information at EDIRC.
Bibliographic data for series maintained by Patricia Power ().