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Publicado en: Documento de trabajo

Dynamic Mechanism Design for a Global Commons

Rodrigo Harrison; Roger Lagunoff.

Documento de Trabajo IE-PUC, N° 442, 2013.

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.

 

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