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Import Disruptions, Exhaustible Resources, and Intertemporal Security of Supply

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  • Robin Lindsey

Abstract

How rapidly should a country exploit a nonrenewable resource if supplementary imports are insecure? With lags in domestic supply adjustment, speeding up extraction will reduce near-term losses in a disruption, but reserves will be depleted more quickly, leading to greater future import dependence. Using a stochastic linear-quadratic model of resource depletion, it is shown that with price rationing of world supply in a disruption, production during undisrupted periods should be speeded up unless costs are rising rapidly with cumulative extraction. With quantity rationing, production should also be speeded up unless the domestic economy is currently nearly self-sufficient.

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  • Robin Lindsey, 1989. "Import Disruptions, Exhaustible Resources, and Intertemporal Security of Supply," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 340-363, May.
    • Handle: RePEc:cje:issued:v:22:y:1989:i:2:p:340-63
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    Cited by:

    1. AMIR, Rabah, 2001. "Stochastic games in economics and related fields: an overview," LIDAM Discussion Papers CORE 2001060, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Lockwood, Ben, 1996. "Uniqueness of Markov-perfect equilibrium in infinite-time affine-quadratic differential games," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 751-765, May.
    3. Kellman, Mitchell & Shachmurove, Yochanan & Saadawi, Tarek, 1996. "Import vulnerability of defense-related industries: An empirical model," Journal of Policy Modeling, Elsevier, vol. 18(1), pages 87-107, February.

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