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On the Relationship Between Exploration and Extraction

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  • R.W. Fraser

Abstract

This paper examines the behavior of a risk-neutral mining firm facing resource stock uncertainty. The particular emphasis of the paper is on the relationship between the firm's separate investment in the activities of exploration and extraction. The significance of this relationship is demonstrated in the context of its role in determining the effects of taxation policies on the firm's overall investment. It is thus argued that the evaluation of such policies should incorporate this relationship in order to be well formulated. Copyright 1986 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia
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Suggested Citation

  • R.W. Fraser, 1983. "On the Relationship Between Exploration and Extraction," Economics Discussion / Working Papers 83-01, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:83-01
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    References listed on IDEAS

    as
    1. Richard Dowell, 1978. "Resources Rent Taxation," Australian Journal of Management, Australian School of Business, vol. 3(2), pages 127-146, October.
    2. Robert Hyde & James R. Markusen, 1982. "Exploration Versus Extraction Costs as Determinants of Optimal Mineral‐Rights Leases," The Economic Record, The Economic Society of Australia, vol. 58(3), pages 224-234, September.
    3. H.F. Campbell & R.K. Lindner, 1982. "Effect of the Resource Rent Tax on Mineral Exploration," School of Economics and Public Policy Working Papers 1982-06, University of Adelaide, School of Economics and Public Policy.
    4. repec:bla:ecorec:v:58:y:1982:i:162:p:224-34 is not listed on IDEAS
    5. Harry F. Campbell, 1980. "The Effect of Capital Intensity on the Optimal Rate of Extraction of a Mineral Deposit," Canadian Journal of Economics, Canadian Economics Association, vol. 13(2), pages 349-356, May.
    6. Emerson, Craig, 1982. "Mining enclaves and taxation," World Development, Elsevier, vol. 10(7), pages 561-571, July.
    7. Hayne E. Leland, 1978. "Optimal Risk Sharing and the Leasing of Natural Resources, with Application to Oil and Gas Leasing on the OCS," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 92(3), pages 413-437.
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    Cited by:

    1. R. W. Fraser & R. J. Van Noorden, 1983. "Extraction of an Exhaustible Resource: The Effects on Investment of Several Parameters Being Subject to Uncertainty," The Economic Record, The Economic Society of Australia, vol. 59(4), pages 365-374, December.

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