On the existence and optimality of competitive equilibria in nonrenewable resource industries

Anthony C. Fisher and Larry Karp

No 6190, CUDARE Working Papers from University of California, Berkeley, Department of Agricultural and Resource Economics

Abstract: If average costs in a nonrenewable resource industry are U-shaped, a competitive equilibrium may not be optimal and, indeed, may not exist. Although the differential equation that describes the change in the rate of extraction is the same for planner and firm, the boundary conditions obtained from the transversality conditions for the respective problems (for planner and firm) will not, in general, be the same. If costs are convex, or if there exists a backstop technology which can produce the resource services at sufficiently low cost, the boundary conditions are, however, the same.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 20
Date: 1989
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Related works:
Working Paper: On the Existence and Optimality of Competitive Equilibria in Nonrenewable Resource Industries (1989)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucbecw:6190

DOI: 10.22004/ag.econ.6190

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