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A retrospective on The Allocation of Energy Resource by William D. Nordhaus

Author

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  • Phoebe Koundouri
  • Dimitrios Reppas
  • Ioannis Souliotis

Abstract

Nordhaus (1973) does have important implications in energy policy. Nordhaus develops a general equilibrium model to determine the path of prices of energy resources and efficiently allocate four main energy resources (petroleum, coal, natural gas, and uranium-235) over time, space and different energy demand categories. Additionally, he explores whether the resulting optimal price paths are close to market-determined ones. His formulation of the model follows a standard dynamic optimization problem; and thus the price paths associated with his optimal solution (shadow prices for resources over time) are interpreted as rents that a competitive market would impute to scarce resources (Hotelling's Rule). The main empirical conclusion of the paper is that the calculated prices are not very far from the actual market ones, with the exception of petroleum products and coal.

Suggested Citation

  • Phoebe Koundouri & Dimitrios Reppas & Ioannis Souliotis, 2015. "A retrospective on The Allocation of Energy Resource by William D. Nordhaus," DEOS Working Papers 1520, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:1520
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    File URL: http://wpa.deos.aueb.gr/docs/Allocation.of.Energy.Resource..pdf
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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. Antonios Antypas & Phoebe Koundouri & Nikolaos Kourogenis, 2013. "Hotelling Rules: Oscillatory Versus Quadratic Trends in Natural Resource Prices," GRI Working Papers 126, Grantham Research Institute on Climate Change and the Environment.
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    2. Vicknair, David & Tansey, Michael & O'Brien, Thomas E., 2022. "Measuring fossil fuel reserves: A simulation and review of the U.S. Securities and Exchange Commission approach," Resources Policy, Elsevier, vol. 79(C).

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