Rent-seeking and fairness: The case of the Reykjavik Savings Bank
In: International review of law and economics, Band 26, Heft 1, S. 123-142
ISSN: 0144-8188
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In: International review of law and economics, Band 26, Heft 1, S. 123-142
ISSN: 0144-8188
A government wants to exploit a renewable resource, yielding a timevarying flow of rent, by leasing it at a fixed rate. Leasing contracts can be expropriated before expiration, albeit at a cost. To minimise transactions costs and avoid the 'resource curse' the government would prefer to enter into an infinitely long contract (i.e. sell the resource), if it could commit not to expropriate. However, with finite costs of expropriation credible commitment is impossible: the government either enters into finite contracts, expropriates with positive probability or does both. The value of the resource to the government is increasing in the cost of expropriation, but decreasing in the variability of the resource rent.
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Working paper
In: Environmental and resource economics, Band 48, Heft 1, S. 25-41
ISSN: 1573-1502
In: USC CLASS Research Paper No. CLASS 13-6
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