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Every government that controls an exhaustible resource must decide whether to exploit it or to conserve and thereby let the subsequent government decide whether to exploit or conserve. This paper develops a theory of this situation and shows when a small probability that some future government...
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of deforestation. Interestingly, we show that uncertainty, even if it induces conversion postponement in the short …-run, increases the average rate of deforestation and reduces expected time for total conversion in the long run. Finally, we … illustrate our findings through some numerical simulations. -- Optimal Stopping ; Deforestation ; Payments for Environmental …
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