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Higher Quality Exhaustible Resource Deposits Receiving Higher or Lower Resource Rents in a Simple Spatial Framework

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  • Hartwick, John

Abstract

Kolstad's (1994) model of intertemporal, competitive supply to a linear market from two distinct exhaustible resource deposits admits two different interior solutions - one with the low cost deposit "earning" the higher resource rent and the other with the low cost deposit "earning" the lower resource rent. This latter outcome turns on the initial size of the low cost deposit being significantly larger than the high cost deposit. We infer then that size can trump quality in the determination of the resource rent for a deposit, when geography is explicit.

Suggested Citation

  • Hartwick, John, 2011. "Higher Quality Exhaustible Resource Deposits Receiving Higher or Lower Resource Rents in a Simple Spatial Framework," Queen's Economics Department Working Papers 274079, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:274079
    DOI: 10.22004/ag.econ.274079
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    References listed on IDEAS

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    1. William D. Nordhaus, 1973. "The Allocation of Energy Resources," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 4(3), pages 529-576.
    2. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    3. Kolstad Charles D., 1994. "Hotelling Rents in Hotelling Space: Product Differentiation in Exhaustible Resource Markets," Journal of Environmental Economics and Management, Elsevier, vol. 26(2), pages 163-180, March.
    4. Robert D. Cairns & Graham A. Davis, 2001. "Adelman's Rule and the Petroleum Firm," The Energy Journal, , vol. 22(3), pages 31-54, July.
    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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