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Irreversible Deveolpment of a Natural Resource: Management rules and policy issues when direct use values and environmental values are uncertain


  • Anastasios Xepapadeas

    () (Department of Economics, University of Crete, Greece)


The paper analyzes resource management that entails the irreversible development of an exhaustible resource when the values of services generated by the resource in either the developed or the undeveloped state are uncertain. An exercise barrier approach is used to derive the privately - optimal and the socially - optimal free boundaries. The two boundaries are used to compare the pace of development under profit maximization and social optimization. Regulatory schemes on resource development that will induce the profit - maximizing decision maker to behave as the social planner, with regard to development choices under uncertainty and irreversibility, are also presented.

Suggested Citation

  • Anastasios Xepapadeas, 2001. "Irreversible Deveolpment of a Natural Resource: Management rules and policy issues when direct use values and environmental values are uncertain," Working Papers 0111, University of Crete, Department of Economics.
  • Handle: RePEc:crt:wpaper:0111

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    References listed on IDEAS

    1. Emmanuel Petrakis & Minas Vlassis, 2004. "Endogenous wage bargaining institutions in oligopolistic sectors," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(1), pages 55-73, July.
    2. Timothy Hinks & Duncan Watson, 2001. "A multinomial logit nondiscriminatory approach to estimating racial wage and occupational discrimination," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 605-612.
    3. Swinton, David H, 1977. "A Labor Force Competition Theory of Discrimination in the Labor Market," American Economic Review, American Economic Association, vol. 67(1), pages 400-404, February.
    4. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
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    Cited by:

    1. Karen Pittel & Lucas Bretschger, 2008. "Sectoral Heterogeneity, Resource Depletion, and Directed Technical Change: Theory and Policy," CER-ETH Economics working paper series 08/96, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    2. Karen Pittel & Lucas Bretschger, 2010. "The implications of heterogeneous resource intensities on technical change and growth," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1173-1197, November.
    3. Arantza Murillas & José Manuel Chamorro, 2006. "Valuation and Management of Fishing Resources Under Price Uncertainty," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 39-71, January.

    More about this item


    Natural resource; irreversible development; uncertainty ; exercise boundary; private optimum; social;

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation


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