IDEAS home Printed from https://ideas.repec.org/p/crj/dpaper/3_2016.html
   My bibliography  Save this paper

Order of resource extraction and factor intensity

Author

Listed:
  • Giuseppe Freni

Abstract

This paper characterizes the optimal time paths of extraction of several nonrenewable resource deposits with different costs of extraction when the extracted resource can be converted into productive capital and the extraction process, as well as the production of the substitute, requires two primary factors of production. Under a technological assumption granting that the time paths of primary factor prices are monotonic, we show that, for each pair (lower cost/higher cost) of deposits, an intensity condition is necessary in order to have discontinuous extraction of the lower cost deposit. We also show that the same condition is sufficient for discontinuous extraction of the lower cost deposit, provided the stock of the lower cost deposit is sufficiently large and the stocks of all other deposits are sufficiently small.

Suggested Citation

  • Giuseppe Freni, 2016. "Order of resource extraction and factor intensity," Discussion Papers 3_2016, CRISEI, University of Naples "Parthenope", Italy.
  • Handle: RePEc:crj:dpaper:3_2016
    as

    Download full text from publisher

    File URL: http://www.crisei.uniparthenope.it/wp/materiale/crisei_dp_3_2016.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ujjayant Chakravorty & Michel Moreaux & Mabel Tidball, 2008. "Ordering the Extraction of Polluting Nonrenewable Resources," American Economic Review, American Economic Association, vol. 98(3), pages 1128-1144, June.
    2. Freni, Giuseppe & Gozzi, Fausto & Pignotti, Cristina, 2008. "Optimal strategies in linear multisector models: Value function and optimality conditions," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 55-86, January.
    3. Amigues, Jean-Pierre & Favard, Pascal & Gaudet, Gerard & Moreaux, Michel, 1998. "On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited," Journal of Economic Theory, Elsevier, vol. 80(1), pages 153-170, May.
    4. Holland, Stephen P., 2003. "Extraction capacity and the optimal order of extraction," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 569-588, May.
    5. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    6. Lewis, Tracy R, 1982. "Sufficient Conditions for Extracting Least Cost Resource First," Econometrica, Econometric Society, vol. 50(4), pages 1081-1083, July.
    7. Kemp, Murray C & Long, Ngo Van, 1980. "On Two Folk Theorems Concerning the Extraction of Exhaustible Resources," Econometrica, Econometric Society, vol. 48(3), pages 663-673, April.
    8. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
    9. Favard, Pascal, 2002. "Does productive capital affect the order of resource exploitation?," Journal of Economic Dynamics and Control, Elsevier, vol. 26(6), pages 911-918, June.
    10. Im, Eric Iksoon & Chakravorty, Ujjayant & Roumasset, James, 2006. "Discontinuous extraction of a nonrenewable resource," Economics Letters, Elsevier, vol. 90(1), pages 6-11, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crj:dpaper:3_2016. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margherita Gallo). General contact details of provider: http://edirc.repec.org/data/crnavit.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.