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Stock Uncertainty In Renewable Resource Theory: The Exploitation Of Aquifers Of Unknown Size

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  • Tsur, Yacov

Abstract

The theory of stock uncertainty in the utilization of exhaustible resources is extended to renewable groundwater resources. A complete characterization of the exploitation process is presented, paying special attention to the formulation of the trasversality conditions. Exploration activities are incorporated and fit smoothly within the framework of analysis. Extensions to other renewable situations are outlined.

Suggested Citation

  • Tsur, Yacov, 1992. "Stock Uncertainty In Renewable Resource Theory: The Exploitation Of Aquifers Of Unknown Size," Staff Papers 14208, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:14208
    DOI: 10.22004/ag.econ.14208
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    References listed on IDEAS

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    1. Glenn C. Loury, 1978. "The Optimal Exploitation of an Unknown Reserve," Review of Economic Studies, Oxford University Press, vol. 45(3), pages 621-636.
    2. Pindyck, Robert S, 1978. "The Optimal Exploration and Production of Nonrenewable Resources," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 841-861, October.
    3. Arrow, Kenneth J. & Chang, Sheldon, 1982. "Optimal pricing, use, and exploration of uncertain natural resource stocks," Journal of Environmental Economics and Management, Elsevier, vol. 9(1), pages 1-10, March.
    4. Tsur, Yacov & Graham-Tomasi, Theodore, 1991. "The buffer value of groundwater with stochastic surface water supplies," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 201-224, November.
    5. Benveniste, L M & Scheinkman, J A, 1979. "On the Differentiability of the Value Function in Dynamic Models of Economics," Econometrica, Econometric Society, vol. 47(3), pages 727-732, May.
    6. Richard J. Gilbert, 1979. "Optimal Depletion of an Uncertain Stock," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(1), pages 47-57.
    7. Deshmukh, Sudhakar D & Pliska, Stanley R, 1980. "Optimal Consumption and Exploration of Nonrenewable Resources under Uncertainty," Econometrica, Econometric Society, vol. 48(1), pages 177-200, January.
    8. N. V. Quyen, 1991. "Exhaustible Resources: A Theory of Exploration," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(4), pages 777-789.
    9. Deshmukh, Sudhakar D. & Pliska, Stanley R., 1985. "A martingale characterization of the price of a nonrenewable resource with decisions involving uncertainty," Journal of Economic Theory, Elsevier, vol. 35(2), pages 322-342, August.
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