Abstract
This paper sheds some light on the possible implications of compensations which are paid for the maintenance of an environmental stock. It shows that serious complications can arise if the resource-owner may influence the compensation price strategically. If the incentive to raise the compensation price dominates the preservation incentive, the steady-state stock falls short from that which is voluntarily held. Whether compensation policies can neglect this feature depends crucially on the institutional setting which determines the compensation price.
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This paper originated from a research project about the stability of international environmental agreements. I gratefully acknowledge financial support by the Volkswagen Foundation. A predecessor of this paper was presented at the Annual Meeting of the Ausschuß für Umwelt- und Ressourcenökonomie of the Verein für Socialpolitik in Ladenburg. I am indebted to the participants for many helpful comments which improved this paper significantly. Thanks are also due to Gernot Klepper, Peter Michaelis and two anonymous referees whose comments and suggestions were very helpful. The usual disclaimer applies.
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Stähler, F. On International compensations for environmental stocks. Environmental and Resource Economics 8, 1–13 (1996). https://doi.org/10.1007/BF00340650
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DOI: https://doi.org/10.1007/BF00340650