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Optimal Contracts For Exploration With Cost Recovery Of An Exhaustible Natural Resource Under Asymmetric Information

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  • Rahman, Shaikh Mahfuzur
  • Helal, Uddin

Abstract

Exploration of an exhaustible resource with cost recovery under asymmetric information about cost is modeled and analyzed employing Principal-Agent theory. Allocation of lower than full information level of effort for the high-cost firms is found socially optimal. However, distortion is less in a two-stage process of exploration and extraction.

Suggested Citation

  • Rahman, Shaikh Mahfuzur & Helal, Uddin, 2004. "Optimal Contracts For Exploration With Cost Recovery Of An Exhaustible Natural Resource Under Asymmetric Information," 2004 Annual meeting, August 1-4, Denver, CO 20180, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea04:20180
    DOI: 10.22004/ag.econ.20180
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    References listed on IDEAS

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