Pricing and depletion of an exhaustible resource when there is anticipation of trade disruption

Journal Article · Sun May 01 04:00:00 EDT 1983 · Q. J. Econ.; (United States)

DOI:https://doi.org/10.2307/1885622· OSTI ID:6137089

Hillman, A L ^[1]; Long, N V

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1. Bar Ilan Univ., Israel

This paper considers pricing and depletion of an exhaustible nonrenewable resource in an economy wherein domestic consumption is provided for by supplementing extraction from the economy's own resource stock with imports, the future supply of which is not assured. The socially optimal response to threat of trade disruption is a more-conservationist depletion program for the domestic resource stock than would be called for, if import supplies were assured to persist. Competitive domestic firms adopt the socially optimal conversationist program. However, firms anticipating domestic market power after the disruption of import supplies are revealed to overextract the domestic resource stock. 33 references, 2 figures.

• OSTI ID: 6137089
• Journal Information: Q. J. Econ.; (United States), Journal Name: Q. J. Econ.; (United States) Vol. 98:2; ISSN QJECA
• 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
COMPETITION
ECONOMIC IMPACT
ECONOMICS
PRICES
RESOURCE CONSERVATION
RESOURCE DEPLETION
SUPPLY DISRUPTION
TRADE