nonrenewable resource scarcity nonrenewable resource theory often is summarized by hotelling s rule this paper reviews theoretical extensions and empirical investigations of resource extraction models observed data are often inconsistent with the hotelling rule suggesting that other characteristics of nonrenewable resource supply including exploration heterogeneous ore quality technological progress and capital investment are important determinants of the dynamic behavior of resource prices given the persistent recurrence of concern about nonrenewable resource scarcity measures of nonrenewable resource scarcity and the empirical evidence for the time trends of those measures are reviewed finally the implications of nonrenewable resource scarcity for economic growth are examined

natural resource prices will they ever turn up abstract natural resource theory predicts that natural resource rents should increase over time however technical progress in resource extraction environmental constraints or great natural abundance could result in stagnant or declining product prices thus there is no theoretical reason to believe that product prices will rise in the near future the prediction of product prices by time series methods is shown to depend critically upon whether the series are modeled as difference or trend stationary dickey fuller and lagrange multiplier tests are used to show that the series are difference stationary long and short sample series are tested trend stationary modeling strongly predicts rising resource prices the result from difference stationary modeling is that there is only a weak supposition that natural resource prices will rise

employers recruitment behaviour and vacancy duration an empirical analysis for the dutch labour market the functioning of labour markets from a demand side perspective is examined in particular the determinants of vacancy duration are studied in the context of a model of employers search behaviour a model for the choice of the recruitment strategy at the start of the search process and the corresponding recruitment duration is developed in which allowance is made for different patterns of duration dependence for each recruitment strategy this model is applied to data on employers search behaviour in the dutch labour market it is found that employers prefer advertisements as the first recruitment channel when applicants are required to have work experience moreover employers prefer to start searching via the labour exchange office when jobs in the secondary segment of the labour market have to be filled it is also found that when advertisements are used as the first recruitment strategy employers need some time to acquire a pool of applicants and to select candidates from this pool it is inte

a model of exhaustible resource exploitation with ricardian rent abstract the question of the optimal rate of development of an exhaustible resource such as a mine has long been a concern of resource economists however with few exceptions in the literature it has been implicitly assumed that orebodies are of uniform quality readily distinguished from their surroundings or else that the mining firm is able to choose the order of mining from sections of the mine which may vary in quality e g grade of ore while such simplifying assumptions have led to a rich array of conclusions they stand in contrast to the varying conditions facing the mining engineer in making cut off grade decisions this paper models a situation where because of orebody configurations the firm cannot choose to mine in order of grade an optimal cut off grade is obtained for each point of time of the mine s life in the case of a socially optimizing firm then in a special case the effects of monopoly and various types of mineral taxation are considered for the cut off grade decision and for ultimate recovery

paired comparison and contingent valuation approaches to morbidity risk valuation abstract this research uses an experimental approach for eliciting consumer valuations of morbidity risk reductions associated with safter chemical products and introduces the paired comparison questions approach to non market valuation in four applications the paired comparisons approach yields higher morbidity valuations than the more familiar contingent valuation approach however both methodologies produce large values of morbidity reduction benefits in comparison to estimates derived from wage hedonic studies explanations for the difference in the estimates and their magnitudes are suggested along with the public policy implications

limit pricing and the in effectiveness of the carbon tax we present a theory of limit pricing monopoly in non renewable resource production facing a very inelastic demand an oil monopoly seeks to induce the highest price that does not destroy its demand unlike the conventional hotellian analysis the monopoly tolerates some ordinary substitutes to its oil but deters high potential ones with limit pricing policy induced extraction changes do not obey the usual logic for example oil taxes have no effect on current oil production extraction increases when high potential substitutes are promoted but can be effectively reduced by supporting ordinary substitutes the carbon tax not only applies to oil it also penalizes its ordinary carbon substitutes whose market shares are taken over by the monopoly thus the carbon tax ambiguously affects current and long term oil production and carbon emissions

nonconvexity efficiency and equilibrium in exhaustible resource depletion we consider the problem of efficiency and existence of a competitive equilibrium in exhaustible resource markets where extraction costs are nonconvex nonconvexity is shown to imply that 1 efficient extraction ceases to the left of the minimum efficient scale i e where average costs exceed marginal costs and 2 a competitive equilibrium does not exist introduction of a backstop technology which induces a flat portion of the industry demand curve restores both existence and efficiency provided that the backstop price is sufficiently low if firms face even a small amount of uncertainty regarding their rivals stocks a backstop technology is sufficient to restore existence of competitive equilibrium even if the backstop price is very high in this case however the competitive equilibrium is not efficient

a microeconometric test of the theory of exhaustible resources abstract this paper generalizes extant developments of the economic theory of exhaustible resource production derives and extends a halvorsen and smith 1991 quarterly journal of economics 106 123 140 type test of the theory and applies the test to a sample of natural gas resources to facilitate our empirical test we extend the model developed in chermak and patrick 1995 journal of environmental economics and management 28 174 189 to explicitly account for the fact that the extracted resource gross product must be processed to obtain the final saleable product duality theory is used to derive econometric models with which the theory is statistically tested using panel data from 29 natural gas wells shadow prices of the resource stock through time which are generally unobservable but necessary for the test are estimated via the indirect cost function contrary to the extant literature we find inter alia that i at any point in time ceteris paribus the in situ resource price a decreases with gross production and b increases with final production and ii we cannot reject the theory of exhaustible resources i e producer behavior is consistent with the theory

reserve and land prices with exploration under uncertainty abstract arrow and chang j econom environ manag 9 1 10 1982 analyze an exploration extraction model with uncertainty about the distribution of deposits reserve prices do not exhibit any rising trend when the unexplored land area is big but in order to know what happens when the unexplored area is smaller a probabilistic analysis not yet performed ibid p 10 is required their conjecture of a rising trend at less than the discount rate is confirmed however land prices can be expected to grow faster than reserve prices which helps discriminate between arrow and chang s and other rationalizations of the failure of resource prices to rise at the discount rate

existence of equilibria in exhaustible resource industries nonconvexities and discrete vs continuous time abstract i demonstrate in a very general model that decreasing or u shaped average cost curves always rule out competitive equilibrium in continuous time models of extractive industries discrete time models of these industries however can have competitive equilibria existence of competitive equilibria in the presence of nonconvexities is sometimes more and sometimes less problematic for extractive industries than for industries making a producible commodity

statistical measures of unsustainability abstract statistical measures are needed to reveal at a glance how far or near various countries are to meeting the conditions of long run sustainability and how conditions are changing on a year to year basis i e whether sustainability is being approached or not the scheme proposed in this paper presents numerical comparisons of energy and materials use in the real world vis a vis an ideal case where all of the identifiable criteria for sustainability are satisfied apart from population stabilization five general but quantifiable criteria for sustainability are suggested including 1 stabilization of greenhouse gas concentrations in the atmosphere 2 stabilization of acidity ph in rainfall 3 reduction of dissipative uses and wastes of heavy metals to natural mobilization rates or lower 4 elimination of agriculture based on pumping fossil water from non renewable aquifers and 5 elimination of loss of arable land because of salination or erosion other criteria such as preservation of biodiversity and socio economic equity between countries and generations might be added to the list they introduce more difficult measurement problems however which are not considered further in the paper having fixed the list of criteria the next step is to identify measures that either go to zero or unity as the system approaches more and more closely to sustainability at least in the limited sense defined above various types of measures of sustainability unsustainability can be developed viz i measures of relative dependence of the economy on non renewable sources of energy and materials ii measures of the productivity of energy and materials consumed by the economic system and iii measures of dissipative loss especially of toxic and hazardous substances specific examples of each type are discussed

competitive equilibria in exhaustible resource markets with decreasing costs a comment on eswaran lewis and heaps s demonstration of nonexistence in a recent article eswaran lewis and heaps 1983 elh correctly pointed out that many analyses of exhaustible resource markets assume the existence of a competitive equilibrium for the industry without checking to see if such an equilibrium is consistent with the behavior of the industry s constituent mining firms elh have attempted to rectify this situation by analyzing the behavior of an industry s firms and seeing if that behavior is consistent with the existence of a competitive equilibrium elh reach the startling conclusion that it takes nothing more than firms with u shaped average cost curves implying an initial range of increasing returns to scale to eliminate the existence of a competitive equilibrium on its own terms elhi s analysis is sound and provides a needed corrective to a major oversight in the literature however given the dramatic nature of their conclusion the assumptions on which elh s analysis is based require careful scrutiny on this score it seems to me that elh s assumptions are implicitly at odds with the conditions that economists usually think of as characterizing competitive price taking behavior to show this elh s analysis is summarized in section i so as to emphasize that their results depend crucially on the assumption that the number of producing firms cannot be treated as a continuously changing variable over time in section ii intertemporal equilibrium is characterized for the case where the number of producing firms is treated as a continuous variable and it is argued that this assumed continuity is not only convenient but actually required for consistency with the assumption of competitive price taking behavior then to further demonstrate the dependence of the nonexistence result on continuity assumptions an equilibrium solution is computed for a specific case set in discrete time section iii contains conclusions

use of damage schedules in environmental valuation the case of urban singapore increasing concerns over environmental degradation have amplified the role of environmental economics and the valuation of non pecuniary environmental resources as tools of analysis to facilitate the design of policies to date however environmental valuation methods have continued to be unreliable misleading and contentious as a guide to resource allocations and damage compensations in this paper a damage schedule is developed based on the scales of relative importance translated from people s judgments about values of various environmental damages or losses the variance stable rank method is applied to the paired comparison responses to obtain the scale values as well as the importance of rankings statistical tests of significance are used to determine the level of the agreement among the survey respondents and the degree of correspondence between different respondent groups this will determine the number of relative importance scales required to adequately represent the responses from all respo

cycles in natural resource commodity prices an analysis of the frequency domain abstract a model is derived that relates price cycles to investment behavior in the mineral industries and predicts that these cycles will be roughly twice as long as the investment period the period between the investment decision and the project completion spectral techniques are used to estimate the principal cycles in metal and fuel prices for the metals the estimated cycle lengths reinforce the model predictions however no significant cycles are found in the prices of the fuels the lead lag relationships between prices of different commodities are also investigated and are found to be significant for those that are jointly produced

interest rates and metal price movements further evidence abstract we offer a theory about the relationship between interest rates and metal price movements the theory is a version of the hotelling rule eq 8 the results obtained from prices of four different metals based on seasonally and unadjusted quarterly data over the period 1968 2 1982 2 suggest that a reformulated hotelling rule which has a dynamic structure can explain the relationship between metal prices and interest rates in view of this result it appears that the return on exhaustible resources is related to changes in rather than the levels of interest rates this result also confirms the results of g m heal and m m barrow rev econom stud 48 161 181 1979 econom lett 7 95 103 1981

a note on mining with investment in capital one of the principal predictions of the theory of the extractive firm is that its rate of output will decline steadily throughout time recently in this journal campbell 1980 presented an interesting analysis suggesting that this behaviour may be altered if one accounts for the fact that firms must invest in some level of fixed capital which is needed in combination with variable inputs to extract the resource in the campbell analysis the fixed capital places a constraint on the maximum rate of extraction it is shown that this constraint is binding and that extraction is therefore constant over some initial period of the mine when the firm behaves optimally this note demonstrates that the campbell result is due to a fixed proportions technology assumption in particular when a neoclassical technology is assumed one finds that the constraint imposed by the level of fixed capital is never binding and that the optimal extraction rate is strictly monotonically declining as a function of time i to demonstrate this an informal argument will suffice let k be the level of fixed capital chosen by the firm let lt be the amount of the variable factor employed in period t assume that the rate of extraction et is given by the production function2

monopoly pricing of an antibiotic subject to bacterial resistance we develop a dynamic bio economic model of bacterial resistance and disease transmission in which we characterize the pricing policy of a monopolist who is protected by a patent after expiration the monopolist behaves competitively in a generic industry having open access to the common pool of antibiotic efficacy and infection the monopolist manages endogenously the levels of antibiotic efficacy as well as the infected population which represent quality and market size respectively and achieves at least temporarily higher such levels than a hypothetically myopic monopolist who does not take into account the dynamic externalities the pricing policy and the biological system is characterized by the turnpike property before the patent vanishes the monopolist behaves more and more myopically leading to a continuous decrease in the price of the antibiotic once the generic industry takes over a discontinuous fall in price occurs whether a prolongation of the patent is socially desirable depends on the relative levels of antibiotic efficacy and infection

competition in markets for depletable resources with setup costs this paper analyzes the impact on exhaustible resource markets of setup costs a sparsely analyzed category of nonconvex production technologies this paper proves that even under idealized circumstances for competition a competitive equilibrium will fail to exist in the presence of setup costs for any utility and cost functions such that a planner would exploit exhaustible resource pools sequentially

price scarcity rent and a modified r per cent rule for non renewable resources since hotelling s seminal paper on the optimal depletion of exhaustible resources much has been published yet confusion remains about whether scarcity rent and price increase or decrease as a resource is depleted when costs tend to rise with depletion we show that hotelling s fundamental results of rising scarcity rent and price paths are sustained and that the path of scarcity rent converges on the r per cent rule provided the objective function is concave predictions of non monotonic or declining scarcity rent paths are due to implicit assumptions that lead to a non concave objective function we identify the sources of these non concavities jel classification q30 d90 c60 prix rente de rarete et une regle modifiee du r pourcent pour les ressources non renouvelables malgre la volumineuse litterature specialisee qui a fleuri depuis qu hotelling a ecrit son memoire fondateur sur l epuisement optimal des ressources renouvelables une grande confusion regne toujours quand il faut etablir si la rente de rarete et le prix augmentent ou chutent a proportion que la ressource s epuise quand les couts tendent a croitre avec l epuisement ce memoire montre que les resultats fondamentaux obtenus par hotelling quant aux sentiers de croissance de la rente de rarete et du prix tiennent toujours et que le sentier de croissance de la rente de rarete converge vers la regle du r pourcent pourvu que la fonction objective soit concave les predictions de sentiers de croissance non monotone ou de declin de la rente de rarete presentees dans la litterature specialisee sont attribuables a des postulats implicites qui engendrent une fonction objective non concave les auteurs identifient les sources de ces non concavites

substitution effects in the valuation of multiple environmental programs abstract a theoretical framework for understanding substitution and complementary effects between environmental programs is derived a multiple program valuation function is specified and its structure analyzed a maximum likelihood estimator is derived to estimate the parameters of the valuation function using referendum type contingent valuation data the empirical analysis shows that the conventional benefit aggregation approach of independent valuation and summation overstates the benefits of two and three program policies by an average of 24 and 54 respectively

the supply of non renewable resources there exists no formal treatment of non renewable resource nrr supply systematically deriving quantity as function of price we establish instantaneous restricted fixed reserves and unrestricted nrr supply functions the supply of a nrr at any date and location not only depends on the local contemporary price of the resource but also on prices at all other dates and locations besides the usual law of supply which characterizes the own price effect cross price effects have their own law they can be decomposed into a substitution effect and a stock compensation effect we show that the substitution effect always dominates a price increase at some point in space and time causes nrr supply to decrease at all other points this new but orthodox supply setting extends to nrrs the partial equilibrium analysis of demand and supply policies thereby it provides a generalization of many results about policy induced changes on nrr markets the properties of restricted and unrestricted supply functions are characterized for hotelling homogeneous as well as ricardian non homogeneous reserves for a single deposit as well as for several deposits that endogenously come into production or cease to be active

ultimate recovery of an exhaustible resource under different market structures the recent emergence of several large and powerful resource cartels has prompted economists to worry about the impact of different market structures on the supply of nonrenewable natural resources an attempt has been made to investigate the effect of market organization on the performance of exhaustible resource industries the authors consider imperfectly competitive markets for exhaustible resources where the reserve base is not fixed instead it is determined endogeneously as part of the supply equilibrium a model is presented which considers the polar cases of monopoly and perfect competition as well as a continuum of intermediate structures testable predictions about the extent of resource utilization that occurs under different market structures are derived these predictions have important implications regarding how resource availability is measured as well as how policies are set for resource conservation and for developing resource substitutes

exhaustible resources non convexity and competitive equilibrium theoretical underpinnings of competitive equilibrium in an exhaustible resource market with non convex u shaped costs are proposed the analysis extends to intertemporal production novshek and sonnenschein s approximation of static competitive equilibrium by limits of cournot equilibria a problem with using novshek and sonnenschein s method is that oligopolistic equilibrium even an open loop equilibrium to which limits might be applied does not exist when there is a non convex technology using epsilon equilibrium as the equilibrium concept finesses this problem there are two types of limiting competitive equilibrium a third type of competitive equilibrium that has been prominent in the literature is found to be inconsistent with limiting approximations

on the intergenerational allocation of natural resources it is known hartwick and others that under standard assumptions a society that invests in reproducible capital the competitive rents on its current extraction of exhaustible resources will enjoy a consumption stream constant in time it is shown here that this result can be interpreted as saying that an appropriately defined stock of capital including the initial endowment of resources is being maintained intact and that consumption can be interpreted as the interest on that patrimony this seems like a useful rule of thumb for policy

economic indicators of resource scarcity a critical essay abstract the theoretical arguments of the conceptual and empirical literature on economic indicators of long run resource scarcity are logically flawed if resource allocators were informed of the nature of resource scarcity their behavior and the economic indicators it generates would reflect the scarcity but if they were so informed we could simply ask them if resources were scarce if they are not informed their behavior and economic indicators are as likely to indicate their ignorance as the reality unfortunately there is no way of knowing whether they are informed or not unless we already know whether resources are scarce

wta estimates using the method of paired comparison tests of robustness the method of paired comparison is modified to allow choices between two alternative gains so as to estimate willingness to accept wta without loss aversion the robustness of wta values for two public goods is tested with respect to sensitivity of the wta measure to the context of the bundle of goods used in the paired comparison exercise and to the scope scale of the public good project there was no statistical difference in wta measures for open space based on independent treatments with different contexts one treatment involved valuing open space within a set of goods with similar value the other treatment involved valuing open space within a choice set of goods which had lower dollar values than open space there was a statistical difference in wta between a permanent expansion in the bus system and a temporary expansion in the bus system we conclude the method of paired comparison appears to be a very promising approach to elicit measures of wta

employers on line recruitment and screening practices i introduction at a relatively low cost the internet offers employers and job searchers access to detailed and up to date information about job searchers and job vacancies in different locations around the world as well as novel tools that improve the ease and speed of search 1 it is therefore not surprising that using the internet has become an integral part of employers and job searchers search practices 2 however research has to date revealed relatively little about the internet s role in matching job searchers to jobs about activities that employers and job searchers pursue on line and whether the internet benefits all employers and job searchers equally in this paper we use technology in a novel way in order to collect new data and assess how employers use services offered by on line job boards in an attempt to facilitate their search the data record descriptions of job vacancies that were posted on the on line job board monster com from 2004 to 2006 from each vacancy s description we can identify employers use of on line search tools offered free of charge by monster com that are designed to facilitate employers search we can also identify several vacancy and employer attributes after the data collection we tracked each vacancy for 16 weeks to identify the week a vacancy could no longer be accessed for viewing on the basis of this information we construct a measure of an employer s on line search outcome the duration of a vacancy s posting on monster com we use these insights for two purposes first we examine employers use of services that are offered by monster com the incidence of employers use of these services when posting job openings on line and attributes that can help to explain their use second we examine whether vacancy and employer characteristics can also help to explain how long it takes before employers withdraw postings of their job vacancies from the on line job board we find that not all employers choose to use on line search tools when posting their vacancies on monster com even though the tools can be used free of charge and are designed to facilitate employers search on line recruitment and screening tools are more likely to be used when employers indicate active engagement in search or have a better knowledge of the monster s online search technology due to having used it frequently a standard model of employer search suggests that vacancy characteristics should help to explain employers choice of on line search tools however we find that relatively small differences exist in the likelihood that the online search tools are used across different types of vacancies both vacancy and employer characteristics can help to explain differences in the duration of a vacancy s posting on monster com in a manner that is consistent with a model of employer search in his survey autor 2001 was the first to review potential implications of the internet for the functioning of the labor market at the time when the on line recruiting industry was in its infancy since then several papers have drawn on different data to examine the internet s role in the labor market our paper complements this literature in three respects first it is one of the first to document how employers use services offered by on line job boards to facilitate their recruitment efforts in this respect the paper by hadass 2004 is of some interest using data on the recruitment efforts of a single u s manufacturing firm in the second half of the 1990s hadass finds that new hires who were recruited via the internet experience shorter tenure than those recruited via informal channels but similar tenure to those recruited through newspaper ads or a hired recruitment agency in her analysis hadass can say much more about the internet s role in matching workers to jobs than this paper because the author observes the outcomes of job searchers who were recruited on line and can compare them to the outcomes of job searchers who were recruited through traditional search channels

price expectations ore quality selection and the supply of a nonrenewable resource abstract economic models of depletion imply that the present value price of a resource and the quality of extracted ore should be directly related the empirical evidence is that in the short run the average quality of extracted ore and in some cases metal output decline in response to a price increase this paper examines a model of extraction with heterogeneous ore quality within a deposit and revised price expectations in which this seemingly paradoxical supply response is rationalized as the outcome of ore quality selection which maximizes the present value of the mine

modelling natural resource scarcity using the error correction approach an error correction framework is used to test the long run hypothesis that prices of natural resources commodities in the united states exhibit scarcity properties from the late nineteenth century to 1988 in the sense that real resource commodity prices have been increasing or following a u shaped pattern introduced by m e slade 1982 the model is formulated to test the validity of the deflation procedure itself along with the scarcity properties results indicate that the model works well as a description of the long term behavior of resources prices and supports the u shaped version of the scarcity hypothesis in a majority of cases an error correction framework is used to test the long run hypothesis that prices of natural resources commodities in the u s exhibit scarcity properties from the late nineteenth century to 1988 in the sense that real resource commodity prices have been increasing or following a u shaped pattern slade 1982 the model is formulated to test the validity of the deflation procedure itself along with the scarcity properties results indicate that the model works well as a description of the long term behaviour of resources prices and supports the u shaped version of the scarcity hypothesis in a majority of cases

testing the efficiency of extraction from a stock resource the theoretical conditions for efficient extraction from a known stock resource by a competitive mining firm are reviewed these conditions are tested using proprietary data from a mining firm output price data and coefficient estimates from a translog cost system are used to compute the in situ value of the resource and the stock effect changes in the in situ value over time are then statistically compared with the expected price path the results reject the hypothesis that the data are consistent with the theoretical model and the maintained hypotheses variations of the basic model that incorporate a time varying discount rate an alternative expected price series and a constraint on the rate of output are also tested and rejected 46 references 10 tables

finding the right employee online determinants of internet recruitment in spanish firms this paper analyses the variation of recruitment strategies in spanish firms with special emphasis on the internet using data from the spanish labour trends survey for the period 2001 2011 we study the factors influencing the decision to use online recruitment and explore the differences between internet and eight traditional recruitment channels our results show that the adoption of the internet monotonically increases over the sample period when internet becomes more universal and even in periods with excess of applicants large firms operating in information intensive activities and located in regions more developed and with better infrastructures are more likely to search for new employees online we also find that internet and traditional recruitment methods follow different patterns especially when using personal referrals and public employment services our results suggest the presence of network externalities derived from the increase number of compatible online job seekers

learning and stock effects in environmental regulation the case of greenhouse gas emissions abstract this paper concerns the optimal regulation of greenhouse gases that lead to global climate change in particular we focus on uncertainty and learning which over time resolves uncertainty we present an empirical stochastic model of climate economy interactions and present results on the tension between postponing control until more is known vs acting now before irreversible climate change takes place uncertainty in our model is in the damage caused by global warming the results suggest that a temporary carbon tax may dominate a permanent one because a temporary tax may induce increased flexibility

sequential development and exploitation of an exhaustible resource do monopoly rights promote conservation this paper explores the problem of sequential exploitation of exhaustible resources by a monopolist when a setup cost must be incurred to access the next pool under certain circumstances the monopolist will always follow a more conservationist path of extraction and delay the introduction of new resource pools compared to a social planner however with other forms of consumer demand the monopolist may exhaust the resource more quickly especially if many new options will follow these results may apply especially to depletable resources like antibiotics or biotech products for which significant research and development costs are required followed by monopoly rights conferred by patents

on the nonexistence of market equilibria in exhaustible resource markets with decreasing costs this paper examines the existence of competitive equilibria in markets for exhaustible resources where there are initial economies of scale in either the extraction of the resource or the utilization of the resource as an input in production in such instances which are fairly common we find that the classic hotelling rule for competitive extraction does not apply since competitive price equilibria generally do not exist this is in marked contrast to static markets where the usual textbook example of firms with u shaped average cost curves is not inconsistent with the existence of competitive equilibria furthermore oligopolistic market equilibria in which resource firms act as nash producers may also fail to exist when there are returns to scale in production

concepts and measures of natural resource scarcity with a summary of recent trends a general model of resource scarcity is presented from which previous models can be derived as special cases previous models of scarcity are compared and contrasted refining the concept of scarcity and leading to a resolution of current disputes over the appropriate measure of scarcity an update of the original work done by barnett and morse is summarized leading to reconsideration of their original conclusions it is found that energy and forest products experienced increasing scarcity during the 1970s

net national product as an indicator of sustainability net national product nnp can potentially serve several objectives among others to measure value added and to be an indicator of welfare in the aftermath of the world commission on environment and development however it also seems important to investigate whether the concept of nnp can serve as an indicator of sustainability my point of departure following hicks 1946 ch 14 is therefore to require that nnp should measure what can be consumed in the present period without reducing future consumption possibilities and in line with this to argue that the nnp should equal the maximum per capita consumption level that can be sustained if sufficiently many facilitating assumptions are made then a concept of nnp that serves as an exact indicator of sustainability can easily be constructed for instance for a closed economy with a constant population a stationary technology and with only one capital good it follows that the present does not reduce future consumption possibilities if and only if it does not decrease the stock of the single capital good hence under the assumption that the one capital good k is identical to the one consumption good x nnp defined as y x k measures the maximal sustainable consumption at time t because then x y is equivalent to k the purpose of this note is to establish that with multiple capital goods it is not in general possible to construct an exact indicator of sustainability on the

the behavior of foreign exchange rates comment the distributors of foreign exchange rates are important for model building and empirical analysis for example many studies have examined foreign exchange market efficiency and currency portfolio management under the assumption that foreign exchange rates are normally distributed the statistical tests in these studies and thus their conclusions may not be reliable if the foreign exchange rates follow non normal distributions realizing the importance of the distribution of exchange rates professors calderon rossell and ben horim 1982 hereafter c b have conducted a study analyzing these distributions based on the skewness of the distribution c b have classified foreign currencies into three groups in the first group the skewness statistic was not significantly different from zero for all currencies and subperiods in the second group the distribution of changes in the foreign exchange rates was close to symmetric except for at least one subperiod in the third group the skewness statistic suggests strongly that all the distributions were asymmetric their results reveal that

on monopoly power in extractive resource markets abstract potential monopoly power in extractive resource markets is reduced by the depletability of reserves this paper examines the dependence of monopoly power on resource rent and on uncertainty over future reserve levels a model is developed that treats reserves as inventories that fluctuate stochastically over time as a result of exploration development and production activities solutions of the model illustrate how output and monopoly power vary with the elasticity of demand rent as a fraction of price and the variance of reserve fluctuations it is shown that uncertainty over future reserves can speed up production and by reducing resource rent restore part of the monopoly power otherwise lost because of depletion antitrust implications are discussed with reference to several resources

cost specification and firm behaviour in a hotelling model of resource extraction in applied resource economics much attention has been focused on the ability of the hotelling model to explain observed firm behavior in this paper a preliminary specification search is performed to determine the appropriate cost function parameterization for the firms in the sample before proceeding to the estimation of the euler equation once a cost function specification is chosen the corresponding euler equation is estimated via the generalization method of moments gmm which allows for better estimates of the euler equations than in previous studies even with the preliminary specification search and the use of gmm estimation the behavior of the panel of fourteen canadian copper mining firms in the data set examined does not seem to be consistent with the basic hotelling model used

grade selection under uncertainty least cost last and other anomalies abstract grade selection rules for heterogeneous resource deposits with increasing marginal extraction costs are derived it is shown that contrary to the conventional wisdom it can be optimal to extract the least cost deposits last there are a number of rules that are compatible with dynamic profit maximization under certainty nevertheless none explains empirical regularities in actual extraction patterns when uncertainty about future price is introduced however the theoretical model conforms closely not only to observed grade selection patterns but also to observed mineral industry price paths

using contingent pricing analysis to value open space and its duration at residential locations to estimate benefits from open space adjacent to residences this paper blends contingent valuation and conjoint analysis within a housing market context the resulting framework contingent pricing analysis represents the stated preference counterpart to hedonic pricing analysis by asking individuals to state prices for hypothetical housing locations which include an environmental amenity then it asks individuals to state their willingness to pay for a better and longer lasting environmental amenity as an advantage over hedonic pricing analysis it directly isolates willingness to pay results indicate that potentially short lasting open space adds no value while preserved open space adds 5 066 or 5 to housing value

invention and innovation under alternative market structures the case of natural resources this paper examines the interactions between market structure and resource allocation over time when there is endogenous technical progress the structures considered are a planned economy pure monopoly and competition with patent rights in an efficient allocation the date of invention coincides with the date of innovation the date at which technology is used this is also true with a pure monopoly but monopoly retards technical progress relative to the efficient level competition for patents rights to a new technology results in excessively rapid technical progress if the resource endowment of the economy is sufficiently large also competition may lead to sleeping patents where invention strictly precedes the date of innovation

on equilibrium in resource markets with scale economies and stochastic prices abstract in this paper i show the existence and the characteristics of equilibrium in a non renewable resource market where extraction costs are non convex and market price is subject to stochastic shocks an empirically relevant setting in my model firms may be motivated to hold inventories to facilitate production smoothing which allows them to continue producing at a smooth pace at any instant when extraction ceases e g when reserves are exhausted this aspect of the model then supports a competitive equilibrium in the presence of non convex costs casual empirical evidence is provided that supports the central features of my model for a variety of non renewable resources lending credence to the explanation for equilibrium i propose

the conservationist s dilemma it is typically thought that conservation of natural resources is encouraged by low interest rates however when capital goods are used to extract the resource low interest rates may discourage rather than encourage conservation using a model of a capacity constrained extractive industry in competitive equilibrium i find the relationship between the initial rate of exploitation and the interest rate if capital is so important that for sufficiently high interest rates the industry is nonviable the graph of initial quantity versus the interest rate is u shaped the traditional result holds at small interest rates but not at large ones copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

strike when the force is with you optimal stopping with application to resource equilibria optimal investment in a nonrenewable resource project occurs when the rate of increase of the project s forward value falls to the force of interest this stopping rule yields a financial interpretation of resource quality as being a property of the project rather than of individual units of reserves it also leads to re interpretations of a rent as the present value of the project rather than of units of reserves and b hotelling s insight as not a rule for the path of rents but an equilibrium algorithm for price the analysis is extended to sequential development of pesticides antibiotics and forests

sectoral supply of minerals of varying quality in this sectoral model of mineral production investment in capacity and variation in orebody grade and volume help explain some stylized facts more than one grade of ore may be exploited simultaneously mine exhaustion but not necessarily entry occurs in declining order of grade the price may rise or fall but is likely to fall initially young industry and must eventually rise at less than the interest rate unless demand expands rapidly these trends exhibit fluctuations due to entry and exhaustion of deposits resource price cyclicality is reinforced because mines keep producing at capacity when the price is falling

intellectual property rights and crop improving r d under adaptive destruction this paper studies how the strength of intellectual property rights iprs affects investments in biological innovations when the value of an innovation is stochastically reduced to zero because of the evolution of pest resistance we frame the problem as a research and development r d investment game in a duopoly model of sequential innovation we characterize the incentives to invest in r d under two competing ipr regimes which differ in their treatment of the follow on innovations that become necessary because of pest adaptation depending on the magnitude of the r d cost ex ante firms might prefer an intellectual property regime with or without a research exemption provision the study of the welfare function that also accounts for benefit spillovers to consumers which is possible analytically under some parametric conditions and numerically otherwise shows that the ranking of the two ipr regimes depends critically on the extent of the r d cost

extraction costs and the economics of nonrenewable resources the study questions the fundamental assumption of the standard aggregate exploration extraction model of nonrenewable resources that extraction costs and the level of reserves are inversely related it also raises questions about the model s conclusions regarding exploration incentives and the valuation of reserves an empirically tested disaggregate model is presented that suggests that exploration activity occurs from firms attempting to balance marginal extraction plus user costs at the intensive and extensive margins exploration is carried out until the marginal discovery cost of a deposit equals its present asset value and a u shaped price path is indicated

the effect of the discount rate on depletion of exhaustible resources this paper argues that despite its widespread acceptance in the literature the basic proposition that a reduction an increase in the discount rate leads to greater conservation faster depletion of an exhaustible resource is not generally valid it shows that the effect of the discount rate on the rate of resource depletion depends on capital requirements for production of the substitute and extraction of the resource and on the size of the resource stock in fact it shows that there always exist at least two ranges of the resource stock size for which the effect is opposite to that conventionally believed

internet job search and unemployment durations after decades of stability the technologies used by workers to locate new jobs began to change rapidly with the diffusion of internet access in the late 1990 s which types of persons incorporated the internet into their job search strategy and did searching for work on line help these workers find new jobs faster we address these questions using measures of internet job search derived from the december 1998 and august 2000 cps computer and internet supplements matched with job search outcomes from subsequent cps files we find that internet searchers are positively selected on observables but negatively selected on unobservables a beneficial unemployment duration reducing causal effect of internet job search is consistent with our estimates only if negative selection on unobservables is especially strong in other words only if the population of on line resumes is strongly adversely selected

trends in natural resource commodity prices an analysis of the time domain abstract this paper attempts to reconcile the theoretical predictions of increasing real prices for nonrenewable natural resource commodities obtained from hotelling style models with the empirical findings of falling prices for these commodities a theoretical model for relative price movements is derived for the case of exogenous technical change and endogenous change in the grade of ores mined the model suggests a u shaped time path for relative prices the implied price movements are tested for all the major metals and fuels and the model parameters are found to be statistically significant for 11 out of the 12 commodities tested

option value under income and price uncertainty abstract we present a rigorous examination of the sign of option value under income and price uncertainty we state and prove three theorems on the sign of option value when preferences are state independent if income is uncertain the sign of option value is opposite the sign of the income elasticity of the good in question the analysis of price uncertainty is in two parts one covers the case of own price uncertainty and the other the case where the price of some other good is uncertain in both cases the sign of option value is generally ambiguous

optimal exploration for and exploitation of heterogeneous mineral deposits abstract we model exploration for and production from a multiple deposit nonrenewable resource exploration is viewed as a bayesian process involving learning about undiscovered reserves and is undertaken both to improve the quality of and to replenish known reserves known reserves are not physically defined but depend on the realizations of discrete episodes of exploration elsewhere and on decisions at each instant about the margin between ore to be mined and low grade material to be rejected the appropriate measure of resource scarcity the sustainable level of the contribution of the resource and the treatment of depletion in the national accounts are considered

on the welfare significance of green accounting as taught by parable abstract green nnp is a national accounting concept that subtracts off from gnp not just depreciation of capital but also depletion of environmental assets for a time autonomous technology green nnp has a rigorous welfare interpretation as an exact measure of the economy s future power to consume the present paper extends the standard framework to cover the case of labor augmenting technological progress for this special case of time dependence a powerful conceptual parable applies it is as if the conclusion from a simple minded welfare story told by the standard neoclassical one sector growth model covers a far more general situation involving any number of different types of capital any convex production possibilities set and fully optimizing behavior implications and applications are discussed

on comparing monopoly and competition in exhaustible resource exploitation abstract it is widely believed that exhaustible resource monopolies do not enjoy as much market power as standard non resource monopolies and may even produce in a socially optimal way we argue that this paradoxical result arises from an inappropriate comparison methodology when similar assumptions are applied to the resource and the conventional cases we show that the resource monopoly behaves as expected i e restricts supply

the taxation of nonreplenishable natural resources revisited abstract the theory of nonreplenishable resource extraction has been extended to allow for extraction costs which increase as deposits are increasingly depleted in these cases profit maximization may result in the cessation of extraction before reserves are totally exhausted the effect of various taxation policies on optimal extraction patterns in these models are derived with a few exceptions the results are that the imposition of a tax will cause operators to extract at faster rates over shorter periods of time and to reduce the total amount of ore extracted the analysis allows for an output price which increases over time

monopoly extraction of an exhaustible resource with two markets although much has been written about monopoly extraction of natural resources the case of a resource being sold in two separate markets has escaped notice we find that a monopolist facing two different iso elastic demand schedules extracts more rapidly than the social planner whether or not arbitrage prevents price discrimination between markets jel classification d42 q3 extraction monopoliste d une ressource epuisable quand il y a deux marches meme si l on a ecrit beaucoup a propos de l extraction monopoliste de ressources naturelles epuisables il semble que le cas d une ressource vendue dans deux marches separes n a pas ete traite on decouvre qu un monopoleur faisant face a deux cedules de demande iso elastiques differentes extrait la ressource plus rapidement que le planificateur social que l arbitrage entre les marches empeche ou non la discrimination par les prix

a test of the hotelling valuation principle time series tests of the hotelling r percent rule for natural resource prices have not been strongly supportive but the tests and the data are subject to serious difficulties we propose here an alternative testing strategy based on another but less widely known implication of the hotelling model we test this implication which we call the hotelling valuation principle by regressing the market values of the reserves of a sample of u s domestic oiland gas producing companies on their estimated hotelling values we find that the estimated hotelling values account for a significant portion of the observed variations in market values and that the hotelling measures are better indicators of the market values of petroleum properties than two widely cited publicly available alternative appraisals

information and exhaustible resources a bayesian analysis abstract we develop a continuous time bayesian model of investment in information about an exhaustible resource because of the way that information affects expectations the deterministic hotelling rule turns out to be more appropriate as a description of how resource owners forecast the value of their stocks than as a predictor of observed changes in the resource price a flow of information generates both unanticipated changes in expectations which cause the mean rate of change in the resource price to deviate systematically from the deterministic hotelling rule and reductions in uncertainty which do not affect the hotelling prediction

a note on extraction with nonconvex costs in a recent article eswaran lewis and heaps 1983 elh model a market for an exhaustible resource in which each firm owns r units of the resource and can extract at a rate of q units for a cost of c q c o 0 and average extraction costs c q q are assumed to exhibit economies of scale initially and reach a minimum at q q marginal cost is always positive but it decreases until q q and then increases i e total cost is not convex the resource cannot be stored once it has been extracted demand does not change over time if extraction proceeds at a rate q at time t then price is p q at time t all firms are assumed to know the entire time path of prices at which the resource will be sold time is taken to be continuous firms are assumed to be price takers in the sense that no firm can influence the time path of prices elh conclude that this model has no equilibrium however the model contains some assumptions that are not reasonable this note relaxes those unreasonable assumptions adds a simplifying assumption and produces an equilibrium the conclusion that there is no equilibrium follows from two of elh s most basic conclusions no firm will ever extract at a rate be

hotelling confronts capm a test of the theory of exhaustible resources a model of pricing of natural resource commodities that integrates financial and product markets is derived and tested the model unifies two strands of the economic and financial literature one that builds on the hotelling model of pricing of exhaustible resources and the other that extends the capital asset pricing model of pricing risky assets tests of the predictions make use of a cost function that was estimated from a panel of small canadian copper mines young 1992 the authors tests fail to reject the theoretical restrictions that are implied by the hotelling capital asset pricing model

intergenerational resource rights efficiency and social optimality the discipline of economics is generally defined as the science of the allocation of scarce resources between competing social objectives given an initial distribution of resources between economic agents how would they behave so as to improve their welfare according to the pareto criterion the agents would exchange commodities until the opportunities for fruitful exchange were fully exhausted and no agent could be made better off without rendering at least one other agent worse off pareto efficiency is a powerful concept in microeconomic analysis provided that the initial distribution of property rights is equitable allocative efficiency gives rise to the best of all possible worlds acknowledging that the assumptions of perfect competition are often violated firms are monopolistic information is incomplete and externalities exist economists have argued for the modification of institutions so that economic reality will conform more closely to the assumptions of the model that yields such gratifying results but microeconomic theory has always maintained that allocative efficiency is in itself insufficient to maximize social welfare bator 1957 a social welfare function is required to discriminate a social optimum among the array of efficient allocations that correspond to alternative assignments of property rights though economists have posited alternative functional forms for the sake of pursuing conceptual arguments welfare functions have remained elusive constructs for well known theoretical and practical reasons consequently a sharp line of demarcation has been drawn between questions of efficiency the province of economics and equity the principal focus of ethical and political discourse in resource economics however the line demarcating efficiency and equity is often crossed the term optimal depletion appears regularly where only efficient depletion is meant while political debates about resource exploitation over time are laden with questions of the proper distribution of our natural patrimony between generations resource economists have predominantly espoused particular use rules that guarantee efficiency but overlook potential improvements in social welfare achievable through the reassignment of property rights across generations we document the evolution and current status of the misuse of the term optimal depletion in section ii we develop a simple two generation three period general equilibrium model in section iii to illustrate how alternative distributions of resource rights between generations relate to alternative pareto efficient solutions in section iv we demonstrate how different social welfare functions affect the optimal solution and associated assignment of resource rights between generations