Regulation of Renewable Resource Exploitation

DOI10.1137/19M1265740MaRDI QIDQ5218227zbMATH OpenOpenAlexFDO

Authors Idris Kharroubi, Thomas Lim, Thibaut Mastrolia

Publication date 2 March 2020

Published in SIAM Journal on Control and Optimization (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1905.09202, https://epubs.siam.org/doi/pdf/10.1137/19M1265740

zbMATH Keywords

BSDEcontract theoryHJB PDElogistic SDE

Mathematics Subject Classification ID

Applications of stochastic analysis (to PDEs, etc.) (60H30) Principal-agent models (91B43) Environmental economics (natural resource models, harvesting, pollution, etc.) (91B76) Optimal stochastic control (93E20)

Abstract: We investigate the impact of a regulation policy imposed on an agent exploiting a possibly renewable natural resource. We adopt a principal-agent model in which the Principal looks for a contract, i.e. taxes/compensations, leading the Agent to a certain level of exploitation. For a given contract, we first describe the Agent's optimal harvest using the BSDE theory. Under regularity and boundedness assumptions on the coefficients, we express almost optimal contracts as solutions to HJB equations. We then extend the result to coefficients with less regularity and logistic dynamics for the natural resource. We end by numerical examples to illustrate the impact of the regulation in our model.

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Cited in

(7)

• Renewal theory and natural resource regulatory policy under uncertainty
• Optimal exploitation for hybrid systems of renewable resources under partial observation
• Harvesting of a stochastic population under a mixed regular-singular control formulation
• Incentives, lockdown, and testing: from Thucydides' analysis to the COVID-19 pandemic
• Regular and exploratory resource extraction models considering sustainability
• A principal-agent model for optimal incentives in renewable investments
• Randomisation with moral hazard: a path to existence of optimal contracts

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