Upcoming in Class Quiz #3 Oct. 27th

Writing Assignment Due Oct. 27th

Homework 7 due Nov. 3rd Exam #3 Thursday Nov. 3rd

Upcoming in Class Group Projects

• Outline – Nov. 17th• Group Papers – Dec. 8th by 5pm

• Presentations – last week of class• Tuesday – Groups 1,2,3• Thursday – Groups 4,5,6

• FINAL EXAM – Monday Dec. 12 Section 1 - 10am Section 2 - 3:10pm

Government Effects When the government allows private

firms to extract minerals offshore or on public lands, two common means of sharing in profits• Bonus bidding – awards the highest bidder

the right to extract and paid up-front• Production royalties – charges a per-ton

royalty on each ton extracted and paid as long as the mineral is extracted

Bidding vs. Royalty How will this affect extraction over time?

Would either be consistent with the efficient allocation?

Suppose the price path and size of deposits are unknown. How would the risk be shared between the government and mining company, for the two different policies?

Bidding vs. RoyaltiesMC

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