On the Economics of Non-Renewable Resources
نویسنده
چکیده
This paper presents an overview of the key economic results associated with the use of non-renewable resources. The basic Hotelling model of resource depletion is discussed, followed by several extensions. The fundamental result is that scarcity rent rises at the discount rate, and that at equilibrium, marginal benefits from extraction must equal the marginal economic cost. If marginal extraction cost is determined by the remaining stock of the resource, then the result is that the scarcity rent rises at the discount rate less the percentage increase in marginal cost caused by the marginal reduction in remaining reserves.
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