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A Model of Resource Depletion with Multiple Grades

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  • ALISTAIR M. ULPH

Abstract

The standard extension of the Hotelling model of resource depletion to consider multiple grades leads to sequential development of successively poorer grades. However, this is not what is observed, and this paper formalises one reason for simultaneous exploitation—the existence of overhead costs in the preparation of a mine. It is shown that the structure of rents which is obtained in the simple model of multiple grades still applies in this more complex situation.

Suggested Citation

  • Alistair M. Ulph, 1978. "A Model of Resource Depletion with Multiple Grades," The Economic Record, The Economic Society of Australia, vol. 54(3), pages 334-345, December.
    • Handle: RePEc:bla:ecorec:v:54:y:1978:i:3:p:334-345
    DOI: 10.1111/j.1475-4932.1978.tb01635.x
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    References listed on IDEAS

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    1. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    2. Vousden, Neil, 1973. "Basic theoretical issues of resource depletion," Journal of Economic Theory, Elsevier, vol. 6(2), pages 126-143, April.
    3. Kemp, Murray C & Suzuki, Hideo, 1975. "International Trade with a Wasting but Possibly Replenishable Resource," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(3), pages 712-732, October.
    4. Lewis Cecil Gray, 1914. "Rent under the Assumption of Exhaustibility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 28(3), pages 466-489.
    5. Stiglitz, Joseph E, 1976. "Monopoly and the Rate of Extraction of Exhaustible Resources," American Economic Review, American Economic Association, vol. 66(4), pages 655-661, September.
    6. Milton C. Weinstein & Richard J. Zeckhauser, 1975. "The Optimal Consumption of Depletable Natural Resources," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 89(3), pages 371-392.
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