On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited

Amigues, Jean‐Pierre; Favard, Pascal; Gaudet, Gérard; Moreaux, Michel

doi:10.1006/jeth.1998.2399

Cited by 62 publications

(49 citation statements)

References 8 publications

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“…The optimal size of the stock to be developed, (2), is derived in the main text, here we prove the optimal timing of development. Recall the definition of the preferred size S * 2T = e −ρT S 1 /βΓ, and of the critical sizeŜ 2T = S 1 / e ρT − 1 + βΓ such that…”

Section: Proof Of Propositionmentioning

confidence: 83%

“…This is an original result because it does not rely on the constraints on the size of the developable resource pool (as in Amigues et al [1], [2]), neither on the fixed availability of a factor employed in extraction activities (as in Kemp and Long, [13]), or on the assumption that the resources be imperfect substitutes (as in Chakravorty and…”

Section: Discussionmentioning

confidence: 99%

“…If it can develop an additional resource, this will make future generations better off than present ones, and counter the desire to smooth consumption. As a result we find that the 2 The assumption of discrete development is crucial to ensure a clear-cut distinction between renewable and non renewable resources (see section 8). Yet it limits the scope of our analysis, ruling out the case of marginal increments of exploited resources.…”

Section: "The First Asymmetry Concerns the Fact That The Terrestrial mentioning

confidence: 96%

“…We model the investment technology as a case of discrete development, where development is indivisible: a constant flow of the initial resource must be invested over a period of time of given length, to obtain the resource substitute only at expiration of the investment program. 2 The flow of resources invested is increasing in the size of the pool of resource developed.…”

Section: "The First Asymmetry Concerns the Fact That The Terrestrial mentioning

confidence: 99%

“…Kemp and Long [13] show that the optimal order of exploitation does not always mimic the order of marginal costs in the case of positive marginal costs of extraction. Amigues et al [1], [2] find that it may be optimal to use the most expensive substitute before extracting a lower cost non renewable. Delaying the extraction of the low cost resource is a strategy for smoothing consumption, as resource stocks are the sole stores of value.…”

Section: "The First Asymmetry Concerns the Fact That The Terrestrial mentioning

confidence: 99%

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05/02219 The simple analytics of developing resources from resources

2005

Fuel and Energy Abstracts

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We consider renewable and non renewable resources as perfect substitutes for consumption, when only the available resource can be invested to develop a new resource pool. A society endowed with a non renewable resource stock always wants to develop a flow of renewable at some positive rate, and to develop a stock of non renewable if the rate of return in terms of resources is positive. A society endowed with a renewable demands for a relatively higher rate of return to consider the development as optimal. The larger the willingness to smooth consumption, the greater the investment in the former case, the smaller in the latter. Delaying investment may be optimal only if development costs in terms of resources are falling.

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Section: Proof Of Propositionmentioning

confidence: 83%

Section: Discussionmentioning

confidence: 99%

Section: "The First Asymmetry Concerns the Fact That The Terrestrial mentioning

confidence: 96%

Section: "The First Asymmetry Concerns the Fact That The Terrestrial mentioning

confidence: 99%

Section: "The First Asymmetry Concerns the Fact That The Terrestrial mentioning

confidence: 99%

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05/02219 The simple analytics of developing resources from resources

2005

Fuel and Energy Abstracts

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Modeling Nonrenewable Resources Use with Multiple Demands and Multiple Sources

Gaudet

Salant

2016

Environ Resource Econ

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The theoretical literature following Hotelling (J Polit Econ 39:137-175, 1931) assumed that all nonrenewable resource needs are satisfied by one type of resource (e.g. "oil"), extractible at different per-unit costs. This formulation implicitly assumes that all users are the same distance from each resource pool, that all users can switch costlessly from one type of resource to another (e.g. liquid fossil fuels to coal or vice-versa), and that all users are subject to the same regulations. These assumptions imply, as Herfindahl (Extractive resources and taxation. University of Wisconsin Press, Madison, pp 63-90, 1967) showed, that in competitive equilibrium all users will exhaust a lower-cost resource completely before beginning to extract a higher-cost resource: simultaneous extraction of different grades of oil or of oil and coal should never occur. In trying to apply the single-demand curve model during the last twenty years, several teams of authors have independently found a need to generalize it to account for users differing in their (1) location, (2) resource needs, or (3) regulatory environment. Each research team found that Herfindahl's strong, unrealistic conclusion disappears in the generalized model; in its place, a weaker Herfindahl result emerges. Since each research team focussed on a different application, however, it has not always been clear that everyone has been describing the same generalized model. The goal This is a somewhat expanded version of Gaudet and Salant (2015). It builds on that paper and a keynote lecture delivered at the SURED in this paper is to integrate the findings of these teams and to present an easily accessible generalization of the nonrenewable resource model to multiple demand curves.

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Optimal Transition from Coal to Gas and Renewable Power Under Capacity Constraints and Adjustment Costs

Lecuyer¹,

Vogt-Schilb²

2018

Environ Resource Econ

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The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

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On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited

Cited by 62 publications

References 8 publications

05/02219 The simple analytics of developing resources from resources

05/02219 The simple analytics of developing resources from resources

Modeling Nonrenewable Resources Use with Multiple Demands and Multiple Sources

Optimal Transition from Coal to Gas and Renewable Power Under Capacity Constraints and Adjustment Costs

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