Monopoly and the rate of extraction of exhaustible resources: Note

Journal Article · Thu Mar 01 04:00:00 EST 1979 · Am. Econ. Rev.; (United States)

OSTI ID:6057709

Tullock, G

The author comments on the article by Stiglitz (Am. Econ. Rev.; 66: 655-661(Sep 1976), especially taking issue with the intuitive model used; the model, a two-period model, uses zero extraction costs and a constant elasticity of demand in appraising the OPEC cartel. He also points to another quite unrealistic assumption, namely: That part of the stock which we do not consume in the first period will be consumed in the second. Pointing out that the constant elasticity assumption is usually used for mathematical convenience - never fits any real world situation - Tullock proceeds to show that not only have the oil-producing countries made a great deal of money from their cartel, but that this is what theory indicates should happen.

• Research Organization: Virginia Polytechnic Inst. and State Univ., Blacksburg
• OSTI ID: 6057709
• Journal Information: Am. Econ. Rev.; (United States), Journal Name: Am. Econ. Rev.; (United States) Vol. 69:1; ISSN AERNA
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700 -- Petroleum-- Economics
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
290400 -- Energy Planning & Policy-- Energy Resources
294002* -- Energy Planning & Policy-- Petroleum
CARTELS
ECONOMIC ELASTICITY
ENERGY SOURCES
FOSSIL FUELS
FUELS
INTERNATIONAL ORGANIZATIONS
MONOPOLIES
OIL-EXPORTING COUNTRIES
OPEC
PETROLEUM
RESOURCE DEPLETION