Prices and Rents of Economically Recoverable Resources

Andrey Vavilov () and Georgy Trofimov ()
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Andrey Vavilov: Institute for Financial Studies
Georgy Trofimov: Institute for Financial Studies

Chapter Chapter 3 in Natural Resource Pricing and Rents, 2021, pp 45-76 from Springer

Abstract: Abstract Models in this chapter are based on the premise of limited resource availability with no explicit resource constraints. A potential resource in the ground is supposed to be inexhaustible but depleting in the sense that the marginal extraction cost increases with cumulative extraction. An economically recoverable resource is determined in the base model for long-term equilibrium as the ultimate cumulative extraction. In the reservoir model, which is relevant to the oil industry, producing reserves are developed through drilling new wells and play a dual role: as reservoirs containing oil inventory and as a factor of production. Finally, we analyse a model with extraction and investment in addition of producing reserves.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:conchp:978-3-030-76753-2_3

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DOI: 10.1007/978-3-030-76753-2_3

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