Valuing mineral reserves when capacity constrains production

Davis, Graham A.; Moore, David J.

doi:10.1016/s0165-1765(98)00080-9

Cited by 21 publications

(11 citation statements)

References 13 publications

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“…The stock evolves in time according to:

\dot{S} = - R .

A limited fossil fuel extraction capacity imposes the second constraint on fossil fuel extraction. Following Campbell (), Davis and Moore (), Cairns () and Cairns (), the extraction capacity is reflected by the specialized capital stock Q . One capacity unit allows the extraction of w fossil fuel units per period, so that maximal extraction at time t is given by wQ ( t ), i.e., R ( t )≤ wQ ( t ).…”

Section: The Modelmentioning

confidence: 99%

“…The more recent literature strand begins with Campbell (1980). Among others, Cairns and Lasserre (1986), Cairns and Lasserre (1991), Davis and Moore (1998), Cairns (1998), Cairns (2001), Holland (2003), Ghoddusi (2010) and Lasserre (1985) belong to this strand. All mentioned studies focus on the optimal extraction of resources and neglect other economic factors such as research or capital not associated with extraction capacity.…”

Section: Introductionmentioning

confidence: 99%

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Endogenous growth with a limited fossil fuel extraction capacity

Kollenbach

2017

Canadian J of Economics

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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.

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“…The stock evolves in time according to:

\dot{S} = - R .

Section: The Modelmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Endogenous growth with a limited fossil fuel extraction capacity

Kollenbach

2017

Canadian J of Economics

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“…The second term is a generalization of the stock effect from the economics of non-renewable resources (Levhari and Livitatan 1977;Solow and Wan 1977;Davis and Moore 1998), which is often viewed as depending on the remaining reserve. If investment cost is not linear ( = 0), the value of deterioration at the margin may not be easily defined and may not sum to the investment cost.…”

Section: Physical Deteriorationmentioning

confidence: 99%

The fundamental problem of accounting

Cairns

2013

Canadian J of Economics

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The fundamental problem of economic accounting is to determine a forward‐looking schedule of rentals, user costs or quasi‐rents to provide for the recovery of irreversible investments. The method derived herein relaxes some restrictive assumptions that are common in capital theory. There can be multiple forms of comprehensive capital. Accounting for all forms of capital, including tangible and intangible capital, is symmetrical. The analytical focus becomes one of fixities and frictions and not optimality. Rentals obey inequalities as opposed to marginal conditions. If discounted profit is positive, rentals, depreciation, and capital value are not unique.

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“…Davis and Moore (1998) revise the Hotelling valuation rule by adding capacity constraints. The older rule suggests that for a competitive market the present value of a natural resource with known quantity is just the product of net value (price less production costs) and the amount of resource.…”

Section: Related Literaturementioning

confidence: 99%

Dynamic Investment in Extraction Capacity of Exhaustible Resources

Ghoddusi¹

2010

Scottish J Political Eco

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This paper studies a resource extraction problem with capacity constraints, expansion options and stochastic demand process. The producer has to decide on the optimal rate of extraction and the optimal time to build further capacity simultaneously. Using numerical methods to solve the problem, it is shown that previous results which suggest that extraction capacity should be built at the beginning, are not necessarily true under uncertainty. I derive equations for the optimal time to build extra capacity. The results of this paper can contribute to better understanding of long‐run energy and commodity supply.

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Valuing mineral reserves when capacity constrains production

Cited by 21 publications

References 13 publications

Endogenous growth with a limited fossil fuel extraction capacity

Endogenous growth with a limited fossil fuel extraction capacity

The fundamental problem of accounting

Dynamic Investment in Extraction Capacity of Exhaustible Resources

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