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Environmental Aspects of Resource Extraction Contracts / Hanna Krings, RWTH Aachen University. Joint Discussion PaperSeries in Economics n°34-2014, 2014, 29 p.http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/index_html%28magks%29Author's abstract :This paper analyzes resource partnerships and their influence on the environmental quality in a resource-rich country by introducing incomplete contracts, imperfect property rights protection, and a lack of valuation for the environment by the government in the South. Employing numerical simulations, I determine the equilibrium extraction rate, the applied extraction technology, and the environmental quality in dependence of the state of democracy in the resource-rich country. In contrast to what one might expect, under certain circumstances it can be environmentally benecial to have incomplete contracts that induce the utilization of a suboptimal technology for resource extraction. Further, reducing the holdup problem by shifting bargaining power to the North, is only desirable if the environmental quality increases with a better extraction technology.