Limited-tenure concessions for collective goods
Nicolas Quérou  1@  , Agnes Tomini  2@  , Christopher Costello  3@  
1 : Center for Environmental Economics - Montpellier  (CEE-M)  -  Site web
Centre National de la Recherche Scientifique - CNRS
2 Place Pierre Viala, bat 26, 34060 Montpellier Cedex 2 -  France
2 : Aix-Marseille School of Economics
CNRS
3 : Bren School, University California Santa Barbara

We analyze an institution called a “limited tenure concession” for its ability to induce efficient public goods contribution and common-pool resource extraction. We first show in a simple repeated game setting that limited tenure, with the possibility of renewal, can incentivize socially-efficient provision of public
goods. We then analyze the ability of this instrument to incentivize the first best for common-pool natural resources such as fish and water, thus accounting for connectivity and natural growth dynamics of the resource. The duration
of tenure and the dispersal of the resource play pivotal roles in whether this limited-duration concession induces the socially optimal private provision. Finally, in a setting with costly monitoring, we discuss the features of a concession
contract that ensure first-best behavior, but at least cost to the implementing agency


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