Behavior of the extractive firm with jointly produced natural resources

Thesis/Dissertation · Thu Jan 01 04:00:00 EST 1987

OSTI ID:5764282

Liu, J T

This thesis is developed in two parts. The first part considers a theoretical and empirical analysis of exploratory uncertainty and joint production. The model focuses on the firm's behavior in the flow market for two exhaustible resources. The theoretical model generalizes earlier work of Devarajan and Fisher (1982). It uses a simple, two-period dynamic model to examine the firm's behavior. The theoretical analysis suggests that the firm's optimal allocation of resources will depend on the nature of the technical constraints to its activities. These include stock effects and jointness effects in the mining and mineral processing labor effort functions as well as the returns to exploratory activity. Elasticities of substitution suggest that labor and material, material and energy are substitutes; labor and energy are complementary. The second part of the thesis analyzes the extractive firm's behavior using the asset market for exhaustible resources. It extends Miller and Upton's (1985a, b) framework to the case of jointly produced natural resources. Extending the theoretical model to the case of jointly occurring minerals indicates that the Hotelling Valuation Principle (HVP) model is influenced by the geological features of mineral deposits, as well as any institutional factors influencing the pricing or rate of extraction of the joint products.

• Research Organization: Vanderbilt Univ., Nashville, TN (USA)
• OSTI ID: 5764282
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290400* -- Energy Planning & Policy-- Energy Resources
ALLOCATIONS
ENERGY SUBSTITUTION
INDUSTRY
INSTITUTIONAL FACTORS
MATERIAL SUBSTITUTION
MATHEMATICAL MODELS
MINERAL INDUSTRY
RESOURCE DEVELOPMENT