Revisiting operating cost in resource extraction industries
Maryke C. Rademeyer,
Richard C.A. Minnitt and
Rosemary M.S. Falcon
Resources Policy, 2018, vol. 58, issue C, 159-164
A modified version of the Cobb-Douglas production function is proposed for simulating production costs in resource extraction models. The resulting average cost function is U-shaped with a wide bottom, and as such should be more representative of the economies of scale associated with bulk operations. It also possesses a minimum which is obtainable from the characteristics of the operations. The viability of the proposed cost function is demonstrated in a profit maximisation exercise constructed as a problem in optimal control, rendering results consistent with what could be seen in a real-world resource extraction operation with similar constraints.
Keywords: Mineral economics; Resource extraction; Operating cost; Cobb-Douglas function (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:58:y:2018:i:c:p:159-164
Access Statistics for this article
Resources Policy is currently edited by R. G. Eggert
More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().