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The Natural Resources Trap
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The Natural Resources Trap: Private Investment without Public Commitment

William Hogan and Federico Sturzenegger

Abstract

Volatility in commodity prices has been accompanied by perpetual renegotiation of contracts between private investors in natural resource production and the governments of states with mineral and energy wealth. When prices skyrocket, governments want a larger share of revenues, sometimes to the point of nationalization or expropriation; when prices fall, larger state participation becomes a burden and the private sector is called back in. Recent and newsworthy changes in the price of oil, which fell from an all-time high of $147 in mid-2008 to $40 by year’s end, are notable for their speed and ... More

Keywords: commodity prices, private investors, natural resource production, energy wealth, nationalization, expropriation, state participation, private sector, price of oil, contract theory

Bibliographic Information

Print publication date: 2010 Print ISBN-13: 9780262013796
Published to MIT Press Scholarship Online: August 2013 DOI:10.7551/mitpress/9780262013796.001.0001

Authors

Affiliations are at time of print publication.

William Hogan, editor

Federico Sturzenegger, editor

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Contents

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1 Contracts and Investment in Natural Resources

William Hogan, Federico Sturzenegger, and Laurence Tai

I Theoretical Papers

2 Petroleum Contracts: What Does Contract Theory Tell Us?

Philippe Aghion, and Lucía Quesada

Commentary

Lawrence H. Summers

4 A Resource Belief Curse? Oil and Individualism

Rafael Di Tella, Juan Dubra, and Robert MacCulloch

Commentary

George-Marios Angeletos

6 Denying the Temptation to GRAB

Nils Wernerfelt, and Richard Zeckhauser

Commentary

Erich Muehlegger

Commentary

Robert Pindyck

II Country Cases

Commentary

Jeffrey Frankel

Commentary

Fernando Candia Castillo

Commentary

Louis Wells

III Conclusion