Title

Specialization And Non-Renewable Resources: Ricardo Meets Ricardo

Keywords

Comparative advantage; Dynamic models; Energy resources; Heterogenous demand; Hotelling theory

Abstract

The one-demand Hotelling model fails to explain the observed specialization of non-renewable 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. © 2004 Elsevier B.V. All rights reserved.

Publication Date

9-1-2005

Publication Title

Journal of Economic Dynamics and Control

Volume

29

Issue

9

Number of Pages

1517-1545

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/j.jedc.2004.08.009

Socpus ID

23844503926 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/23844503926

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