Extracting Resource Deposits of Unknown Size: Optimal Order

The optimal order of extracting resource deposits of unknown size depends on the informational characteristics of the extraction process. This paper fills the gap between two strands of literature. The first strand is about the optimal extraction of single reserve under stock-size uncertainty. The s...

Full description

Saved in:
Bibliographic Details
Published inGerman economic review (Oxford) Vol. 10; no. 4; pp. 401 - 421
Main Authors Kemp, Murray C., Van Long, Ngo
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.11.2009
De Gruyter
Walter de Gruyter GmbH
Subjects
Economic theory
Exhaustible resources
order of exploitation
Studies
value of information
Online AccessGet full text

Cover

More Information
Summary:The optimal order of extracting resource deposits of unknown size depends on the informational characteristics of the extraction process. This paper fills the gap between two strands of literature. The first strand is about the optimal extraction of single reserve under stock-size uncertainty. The second strand is about the optimal order of extraction of deposits of known sizes. Our emphasis on the premium for resolution of uncertainty complements Solow and Wan’s shadow surcharge when extraction moves from a low-cost deposit to a high-cost one.
Bibliography:ark:/67375/WNG-5R4TXL8T-1
istex:48790A049906F9CB6A2FFF0F05C42D9658AACAD6
ArticleID:GEER488
ISSN:1465-6485
1468-0475
DOI:10.1111/j.1468-0475.2009.00488.x