Both technological and natural resource possibilities seem to evolve in cycles. The “Resource Opportunity Model” in this paper introduces the technological opportunity thinking into natural resource modeling. The natural resource industries’ choice between incremental, complementary innovations, and drastic, breakthrough innovations, will give rise to long-run cycles in the so-called familiar resource stock, which is the amount of natural resources determined by the prevailing paradigm. Incremental innovations will increase the exhaustion of the stock, and drastic innovations will create a new paradigm and, thereby, new technological opportunities and a new stock of familiar resources. Drastic innovations are endogenously affected by the knowledge level and induced either by scarcity of technological opportunities or by scarcity of resources. Generally, increased innovation ability increases the knowledge stock and cumulative income over time, but does not affect the sustainability of the resource stock even though the intensity of the resource cycles increases. However, too low innovation ability might drive the sector into technological stagnation, and resource exhaustion in the long run; and too high innovation ability might drive the sector into extraction stagnation, and resource exhaustion in the short run.
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Paper provided by Göteborg University, Department of Economics in its series Working Papers in Economics with number
116.
Length: 40 pages Date of creation: 14 Nov 2003 Date of revision: Handle: RePEc:hhs:gunwpe:0116
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, Göteborg University Box 640, SE 405 30 GÖTEBORG, Sweden Phone: 031-773 10 00 Web page: http://www.handels.gu.se/econ/ More information through EDIRC
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