Exhaustible natural resources, normal prices and intertemporal equilibrium
AbstractThis paper proposes an extension of the classical theory of normal prices to an n-commodity economy with exhaustible natural resources. The central idea is developed by two analytical steps. Firstly, it is assumed that a given flow of an exhaustible resource in short supply is combined with the coexistence of two methods of production using that resource. Sraffaâ€™s equations are reinterpreted by adopting the concept of effectual supply of natural resources and avoiding the assumption of perfect foresight. Secondly, in force of the Hotelling rule, some limitations are imposed to the dynamics of normal prices and, by implication, to technical and structural change. A comparison, between such approach and the notion of intertemporal equilibrium with natural resources, introduces the central argument. The final part of the paper presents a critical assessment of recent works in this area. The conclusions are focused on methodological issues.
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Bibliographic InfoPaper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 57.
Date of creation: Feb 2002
Date of revision:
Exhaustible resources; Hotelling rule; normal prices; Sraffian analysis.;
Find related papers by JEL classification:
- B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
- Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
- D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kurz,Heinz D. & Salvadori,Neri, 1995.
"Theory of Production,"
Cambridge University Press, number 9780521443258.
- 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.
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