Most models take resource extraction rates as exogenously given.
This paper overviews the theory of endogenous resource substitution, which derives the prices of energy resources such as oil, coal and natural gas from a Hotelling type dynamic optimization framework. An empirical model illustrates resource price paths and switch points for major energy end-uses such as electricity, transportation, heating and residential use. The insights from the model are used to discuss present trends in energy use and resource substitution for India, and implications for climate change mitigation. Click on the paper title to download the paper and the figure. Click here to download Adobe Acrobat Reader .