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Nordhaus’s Programming Model of Energy Futures Revisited

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  • John M. Hartwick

    (Department of Economics, Queen’s University, Kingston, ON K7L3N6, Canada)

Abstract

We conduct a small-scale linear programming simulation of an energy future based on the work of Nordhaus. We are able to link our quantity model (a primal model) quite precisely to its price problem (a dual model). Our amended Nordhaus formulation, with our present-value adjustments, has a dual (price) program that solves problems under correct dynamic efficiency conditions, standard in economics. We present, then, a corrected Nordhaus template, a linear program, suitable for simulating energy futures with good-quality data. We elevate the trajectory analysis of resource prices to a central role in the analysis of energy futures.

Suggested Citation

  • John M. Hartwick, 2025. "Nordhaus’s Programming Model of Energy Futures Revisited," Energies, MDPI, vol. 18(7), pages 1-11, March.
    • Handle: RePEc:gam:jeners:v:18:y:2025:i:7:p:1563-:d:1617119
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    References listed on IDEAS

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    1. 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.
    2. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    3. Pindyck, Robert S, 1978. "Gains to Producers from the Cartelization of Exhaustible Resources," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 238-251, May.
    4. David Levhari & Robert S. Pindyck, 1981. "The Pricing of Durable Exhaustible Resources," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 96(3), pages 365-377.
    5. Gerard Gaudet & Michel Moreaux & Stephen W. Salant, 2001. "Intertemporal Depletion of Resource Sites by Spatially Distributed Users," American Economic Review, American Economic Association, vol. 91(4), pages 1149-1159, September.
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