PEW: Bard Harstad

Mar 21, 2022, 4:15 pm4:15 pm
127 Corwin
Event Description

Every government that controls an exhaustible resource must decide whether to exploit it or to conserve and thereby let the subsequent government decide whether to exploit or conserve. This paper develops a positive theory of this situation and shows when a small change in parameter values has a multiplier effect on exploitation. The multiplier is taken advantage of by a lobby paying for exploitation; it can also be taken advantage of by a donor compensating for conservation, but there is a fundamental asymmetry between the two. A normative analysis uncovers when compensations are optimally offered to the president, the party in power, the general public, or to the lobby group.