Dynamic Resource Management Under Weak Property Rights: A Tale of Thieves and Trespassers

30 Pages Posted: 25 Aug 2016

See all articles by Mauricio Rodríguez-Acosta

Mauricio Rodríguez-Acosta

Universidad del Rosario

Sjak Smulders

Tilburg University - Tilburg University School of Economics and Management; University of Calgary - Department of Economics

Date Written: July 2016

Abstract

Using a dynamic framework with strategic interactions, we study the management of a non-renewable natural resource when property rights are generally weak. Under generally weak property rights both the resource stock and the revenues from exploiting it are imperfectly protected, due to trespassing and theft respectively. Trespassing and theft affect the legitimate owner’s extraction decision: extracting the resource today protects the stock against trespassing but exposes the revenues to theft. Moreover, in an evolving institutional setting, the anticipation of a change in the strength of property rights further distorts the extraction decision: e.g., if the owner anticipates stronger property rights in the future, extraction is delayed. Our results indicate that the depletion of the resource is decreasing in the intensity of theft. In addition, when the owner and the trespassers are affected by theft, the depletion of the resource is below (above) the social optimal level if the intensity of theft is high (low).

Keywords: depletion, institutions, non-renewable resources, regime shift, weak property rights

JEL Classification: K420, P480, Q320, Q380

Suggested Citation

Rodríguez-Acosta, Mauricio and Smulders, Jacobus (Sjak) A., Dynamic Resource Management Under Weak Property Rights: A Tale of Thieves and Trespassers (July 2016). CESifo Working Paper Series No. 6019. Available at SSRN: https://ssrn.com/abstract=2829262

Mauricio Rodríguez-Acosta

Universidad del Rosario ( email )

Calle 12 No. 6-25
Bogota, DC
Colombia

Jacobus (Sjak) A. Smulders (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2920 (Phone)
+31 13 466 3042 (Fax)

HOME PAGE: http://www.uvt.nl/webwijs/english/show.html?anr=801585&lang=en

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
31
Abstract Views
251
PlumX Metrics