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Authors
Publisher
Philipps-Universität Marburg
Abstract
This paper analyzes resource partnerships and their in
uence on the environmental quality in a resource-rich country by introducing incomplete contracts, imperfect property rights protection, and a lack
of valuation for the environment by the government in the South. Em-
ploying numerical simulations, I determine the equilibrium extraction
rate, the applied extraction technology, and the environmental quality
in dependence of the state of democracy in the resource-rich country.
In contrast to what one might expect, under certain circumstances it
can be environmentally bene�cial to have incomplete contracts that
induce the utilization of a suboptimal technology for resource extrac-
tion. Further, reducing the holdup problem by shifting bargaining
power to the North, is only desirable if the environmental quality in-
creases with a better extraction technology.
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This item has been published with the following license: In Copyright