The management of natural resources under asymmetry of information
We
provide an introductory review to the application of the theory of incentives under
asymmetry of information to the exploitation and management of natural
resources. We concentrate mostly on principalagent problems with adverse
selection as posed by the regulation of nonrenewable resources, stressing the
fact that the inherently dynamic nature of natural resource exploitation
creates situations and results not found in other contexts. We also point out
private information issues that may arise involving renewable as opposed to
nonrenewable resources, strategic interactions with signalling between decision
makers in resource exploitation games, and the design of environmental policy where
principal-agent problems subject to moral hazard may occur
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