Extraction of an Exhaustible Resource: The Effects on Investment of Several Parameters Being Subject to Uncertainty*

Robert Fraser and R. J. van Noorden

The Economic Record, 1983, vol. 59, issue 4, 365-374

Abstract: This article shows that the effect on investment of the introduction of uncertainty about the size of one parameter depends on what other parameters are simultaneously uncertain. Further, two parameters may be linked with positive or negative covariances. The covariances are here shown to have important effects on the investor, whether risk neutral or risk averse. Governments are advked to consider policies that affect the covariances of those parameters that are key influences on in vestment.

Date: 1983
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https://doi.org/10.1111/j.1475-4932.1983.tb00826.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecorec:v:59:y:1983:i:4:p:365-374

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