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Specialization and Nonrenewable Resources: Ricardo Meets Ricardo

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  • Ujjayant Chakravorty
  • Darrell Krulce
  • James Roumasset

Abstract

The one demand Hotelling model fails to explain the observed specialization of nonrenewable resources in specific end-uses. We develop a model with multiple demands and multiple resources and grades. Principles of Ricardian absolute and comparative advantage play an important role in determining the extraction profile. Absolute advantage in all end-uses creates a tendency for the dominant resource to be used first. But comparative advantage induces specialization of particular resources in specific end-uses. The 2 x 2 model of energy use is characterized, illustrating the trade-off between least-cost-first and resource specialization. The multiple-demand model also facilitates the analysis of resource and/or end-use-specific taxation.

Suggested Citation

  • Ujjayant Chakravorty & Darrell Krulce & James Roumasset, 2003. "Specialization and Nonrenewable Resources: Ricardo Meets Ricardo," Emory Economics 0305, Department of Economics, Emory University (Atlanta).
  • Handle: RePEc:emo:wp2003:0305
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lafforgue, Gilles & Magné, Bertrand & Moreaux, Michel, 2008. "Energy substitutions, climate change and carbon sinks," Ecological Economics, Elsevier, vol. 67(4), pages 589-597, November.
    2. Im, Eric Iksoon & Chakravorty, Ujjayant & Roumasset, James, 2006. "Discontinuous extraction of a nonrenewable resource," Economics Letters, Elsevier, vol. 90(1), pages 6-11, January.
    3. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    4. Roumasset, James A. & Wada, Christopher A., 2012. "Ordering the extraction of renewable resources: The case of multiple aquifers," Resource and Energy Economics, Elsevier, vol. 34(1), pages 112-128.
    5. Gaudet, Gerard & Moreaux, Michel & Withagen, Cees, 2006. "The Alberta dilemma: Optimal sharing of a water resource by an agricultural and an oil sector," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 548-566, September.
    6. James Roumasset & Christopher Wada, 2009. "Renewable Resource Management with Alternative Sources: the Case of Multiple Aquifers and a "Backstop" Resource," Working Papers 200913, University of Hawaii at Manoa, Department of Economics.
    7. Roumasset James & Wada Christopher A, 2011. "Ordering Renewable Resources: Groundwater, Recycling, and Desalination," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-29, May.
    8. Pitafi, Basharat A.K. & Roumasset, James A., 2006. "Integrated management of multiple aquifers with subsurface flows and inter-district water transport," 2006 Annual meeting, July 23-26, Long Beach, CA 21473, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. James Roumasset & Christopher Wada, 2013. "Ordering Extraction from Multiple Aquifers," Working Papers 2013-12, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.

    More about this item

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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