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The Notion of Effectual Supply and the Theory of Normal Prices with Exhaustible Natural Resources

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  • Sergio Parrinello

Abstract

This paper proposes a revised theory of the classical notion of normal prices for an economy with exhaustible natural resources. The author introduces the notion of effectual supply and argues that Sraffa's equations, without the Hotelling rule equation, can be reformulated to deal with the existence of an exhaustible natural resource. Such a revision of a well-established theory requires a reinterpretation and methodological clarification of Sraffa's equations, but without a change in their mathematical form. The revised theory must focus on the effectual supply of the resource and it can ignore its total endowment.

Suggested Citation

  • Sergio Parrinello, 2004. "The Notion of Effectual Supply and the Theory of Normal Prices with Exhaustible Natural Resources," Economic Systems Research, Taylor & Francis Journals, vol. 16(3), pages 311-322.
    • Handle: RePEc:taf:ecsysr:v:16:y:2004:i:3:p:311-322
    DOI: 10.1080/0953531042000239392
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    References listed on IDEAS

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    1. J. A. Kregel (ed.), 1983. "Distribution, Effective Demand and International Economic Relations," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-17177-4.
    2. Christian Bidard & Guido Erreygers, 2001. "The Corn–Guano Model," Metroeconomica, Wiley Blackwell, vol. 52(3), pages 243-253, August.
    3. Sergio Parrinello, 1983. "Exhaustible Natural Resources and the Classical Method of Long-Period Equilibrium," Palgrave Macmillan Books, in: J. A. Kregel (ed.), Distribution, Effective Demand and International Economic Relations, chapter 6, pages 186-199, Palgrave Macmillan.
    4. Sergio Parrinello, 2002. "Exhaustible natural resources, normal prices and intertemporal equilibrium," Working Papers in Public Economics 57, University of Rome La Sapienza, Department of Economics and Law.
    5. Heinz Kurz & Neri Salvadori, 1997. "Exhaustible Resources in a Dynamic Input-Output Model with 'Classical' Features," Economic Systems Research, Taylor & Francis Journals, vol. 9(3), pages 235-252.
    6. Heinz D. Kurz & Neri Salvadori, 2001. "Classical Economics and the Problem of Exhaustible Resources," Metroeconomica, Wiley Blackwell, vol. 52(3), pages 282-296, August.
    7. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, January.
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    Cited by:

    1. Sergio Parrinello, 2014. "A search for distinctive features of demand-led growth models," PSL Quarterly Review, Economia civile, vol. 67(270), pages 309-342.
    2. Yoann Verger, 2015. "Sraffa and the environment," Working Papers hal-01186009, HAL.
    3. Biao Huang, 2018. "An exhaustible resources model in a dynamic input–output framework: a possible reconciliation between Ricardo and Hotelling," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 7(1), pages 1-24, December.

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