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Herfindahl rule under return flows

Author

Listed:
  • Alla Fridman

    (National Research University Higher School of Economics (HSE))

Abstract

The paper investigates the efficient extraction path in a partial equilibrium model with exhaustible resource, the usage of which is characterized by return flows, and a backstop to analyze the sequence of the resource use. It is shown that in the presence of users with different return flow coefficients Herfindahl rule can be violated as the low-cost and the high-cost resources could be used simultaneously.

Suggested Citation

  • Alla Fridman, 2014. "Herfindahl rule under return flows," Economics Bulletin, AccessEcon, vol. 34(3), pages 1456-1462.
    • Handle: RePEc:ebl:ecbull:eb-14-00175
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2014/Volume34/EB-14-V34-I3-P134.pdf
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    References listed on IDEAS

    as
    1. Chakravorty, Ujjayant & Krulce, Darrell L, 1994. "Heterogeneous Demand and Order of Resource Extraction," Econometrica, Econometric Society, vol. 62(6), pages 1445-1452, November.
    2. Lewis, Tracy R, 1982. "Sufficient Conditions for Extracting Least Cost Resource First," Econometrica, Econometric Society, vol. 50(4), pages 1081-1083, July.
    3. Kemp, Murray C & Long, Ngo Van, 1980. "On Two Folk Theorems Concerning the Extraction of Exhaustible Resources," Econometrica, Econometric Society, vol. 48(3), pages 663-673, April.
    4. Holland, Stephen P., 2003. "Extraction capacity and the optimal order of extraction," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 569-588, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Exhaustible resource; return flows; optimal extraction; Herfindahl principle;
    All these keywords.

    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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