Title

Specialization and non-renewable resources: Ricardo meets Ricardo

Authors

Authors

U. Chakravorty; D. Krulce;J. Roumasset

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Abbreviated Journal Title

J. Econ. Dyn. Control

Keywords

comparative advantage; dynamic models; energy resources; heterogenous; demand; hotelling theory; EXHAUSTIBLE RESOURCES; EXTRACTION; ECONOMICS; ORDER; COST; Economics

Abstract

The one-demand Hotelling model fails to explain the observed specialization of nonrenewable resources. We develop a model with multiple demands and resources to show that specialization of resources according to demand is driven by Ricardian comparative advantage while the order of resource use over time is determined by Ricardian absolute advantage. An abundant resource with absolute advantage in all demands must be initially employed in all demands. When each resource has an absolute advantage in some demand, no resource may be used exclusively. The two-by-two model is characterized. Resource and demand-specific taxes are shown to have significant substitution effects. (c) 2004 Elsevier B.V. All rights reserved.

Journal Title

Journal of Economic Dynamics & Control

Volume

29

Issue/Number

9

Publication Date

1-1-2005

Document Type

Article

Language

English

First Page

1517

Last Page

1545

WOS Identifier

WOS:000231520100003

ISSN

0165-1889

Share

COinS