Equilibrium in exhaustible resource industries

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

OSTI ID:6979116

Lozada, G A

This dissertation concerns the existence and properties of perfect-foresight competitive equilibria in extractive resource industries. Under very general conditions on the demand curve and cost function, Chapter I demonstrates that the Hotelling Rule is a consequence of such a competitive equilibrium, but does not follow solely from the profit-maximizing behavior of a single firm. Chapter II then shows that if there is no cutoff price, existence of market equilibria in Hotelling's model may fail. The analysis is extended to general equilibrium and shows how presence of an essential exhaustible resource violates standard assumptions in existence proofs. In Chapte III, nonconvexities are introduced, and there a very general nonexistence results is provided - one which, though related to results for producible commodities, hinges on the particular features of an exhaustible resource. Chapter IV then reimposes convexity and goes on to ask the old question of in what order different deposits of an exhaustible resource will be mined. Chapter V treats the Hotelling Rule exhaustively, showing, for example, that falling equilibrium prices cannot be ruled out. Finally, Chapter VI describes dynamic-equilibrium paths when firms are capacity-constrained and must plan an investment schedule.

• Research Organization: Stanford Univ., CA (USA)
• OSTI ID: 6979116
• 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
CAPACITY
ECONOMIC ANALYSIS
ECONOMICS
EQUILIBRIUM
INDUSTRY
INVESTMENT
MINERAL INDUSTRY
PRICES
RESOURCE DEPLETION
RESOURCE DEVELOPMENT
SUPPLY AND DEMAND