Management of a transboundary wildlife population: A self-enforcing cooperative agreement with renegotiation and variable transfer payments

This paper characterizes a dynamic contract that allows renegotiation and variable transfer payments (VTP) between owners of two independently-harvested, ecologically-dependent mammal populations. The decision environment is modeled as a two-person differential game. We develop a recursive-efficiency criterion that forms the basis for determining the size of the VTP, which makes the bargaining contract renegotiation-proof and self-enforcing. We further show that the VTP is just as Pareto-efficient as a lump sum or fixed annual transfer payment. A nuisance wildlife species management forms a basis for numerical illustration.