The Effect of Capital Intensity on the Optimal Rate of Extraction of a Mineral Deposit

Campbell, Harry F.

doi:10.2307/134694

Cited by 82 publications

(35 citation statements)

References 7 publications

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“…Early decommissioning of existing coal power plants has also been studied using numerical models (e.g., Rogelj et al, 2011;IEA, 2014). 4 The interaction of investment and natural resources extraction is also the subject of the theory of the mine (e.g., Campbell, 1980;Gaudet, 1983;Lasserre, 1985), in which installed capital similarly limits the extraction rate of (a single type of) minerals. After reviewing this literature, Cairns (1998) notes that "there can be three phases in the exploitation of the mine, namely (1) a period of positive investment after time t = 0, in which production is at full capacity, then (2) a period in which investment is zero and production is at full capacity, and finally (3) a period of declining production".…”

mentioning

confidence: 99%

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

Lecuyer¹,

Vogt-Schilb²

2014

Policy Research Working Papers

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mentioning

confidence: 99%

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

Lecuyer¹,

Vogt-Schilb²

2014

Policy Research Working Papers

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“…The analogous result from the peak-load pricing literature is that the capital payment should equal the sum of the shadow values. See also Campbell (1980) andHolland (2003) for similar results in exhaustible resource models. 25.…”

Section: Acknowledgementsmentioning

confidence: 62%

Privatization of Water-Resource Development

Holland

2006

Environ Resource Econ

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This paper analyzes the inefficiencies from market power and return-flow externalities in private construction of a water project. The model pays special attention to increasing groundwater pumping costs, project set-up costs, limited project capacity, and return flow to the aquifer. For a given capacity, the return-flow externality causes project owners to construct the project too late when the price of groundwater is too high because the external benefit of return-flow to the aquifer is not captured. Market power exacerbates these effects since the project owner delays construction to accelerate groundwater overdraft. The return-flow externality and market power also decrease installed capacity and increase overdraft from the aquifer. Applying the model to the construction of the Central Arizona Project (CAP) for a given capacity, the estimated deadweight loss from hypothetical private construction of the project ($0.853 billion) is substantially less than the literature’s estimate of deadweight loss from actual construction by the Bureau of Reclamation ($2.603 billion). However, under the federal subsidies and insecure property rights that accompanied the CAP, private construction results in a larger estimated efficiency loss ($6.126 billion). Copyright Springer 2006Central Arizona Project, groundwater, optimal control, privatization, return flow, surface water, water, water project construction, H0, L9, Q2, Q3,

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“…To focus instead on scale of investment in each project can be supported not only by findings in Slade (1984) and Deacon (1993), but also by reference to Campbell (1980). He finds that the most important decision is investment, i.e., installation of extraction capacity.…”

Section: How Taxes Distort Decisionsmentioning

confidence: 99%

Rent Taxation for Nonrenewable Resources

Lund

2009

Annu. Rev. Resour. Econ.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents inThe literature on taxation of rents from nonrenewable resources uses different theoretical assumptions and methods and a variety of empirical observations to arrive at widely diverging conclusions. Many studies use models and methods which disregard uncertainty, investigating distortionary effects of different taxes on whether, when, and how to explore for, develop and operate resource deposits. Introducing uncertainty into the analysis opens a range of challenges, and leads to results which cast doubt upon the relevance of studies which neglect uncertainty. There are, however, several ways to analyze uncertainty, regarding companies' behavior, resource price processes, and diversification opportunities, all with different implications for taxation. Methods developed in financial economics since the 1980's are promising, but still not in widespread use. Some more specific topics covered in this review are optimal risk sharing between companies and governments, time consistency and fiscal stability, the relationship between taxes and discount rates, and transfer pricing. JEL classification numbers: B20, H20, H25, L71, O13, Q38

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The Effect of Capital Intensity on the Optimal Rate of Extraction of a Mineral Deposit

Cited by 82 publications

References 7 publications

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

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

Privatization of Water-Resource Development

Rent Taxation for Nonrenewable Resources

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