This project consists of two papers on resource extraction in dynamic games.
The first paper, develops a model of resource extraction where the owner is strategic and takes into account that extraction today will influence (i) how much the competitors will extract tomorrow, (ii) other countries' willingness to pay for conservation, and (thus) (iii) the owner's bargaining power when conservation is negotiated. The strategic concerns imply that third countries, paying for conservation, may benefit from asymmetric contracts where all extraction takes place in one country while the resource in the other countries is conserved. The strategic concerns also imply that negotiating a treaty specifying extraction levels (of fossil fuels) will be more efficient than a treaty specifying consumption levels. This project will be further developed in 2018.
This second paper, develops a dynamic game in which countries can both extract fossil fuels and decide on how much to consume. The difference between consumption and extraction must be imported (or exported, if negative) and the sum of imports must equal zero for the world market to clear. In a dynamic game, where the resource is exhaustible, I study how negotiations and agreements on extraction levels differ from negotiations and agreements on consumption levels.