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Ore Money Ore Problems: A Resource Extraction Game

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Abstract

Economic theories of the exploitation of depletable natural resources are built around a core model of intertemporal profit maximization that predicts that (barring unforeseen shocks) scarcity crises will not arise because forward looking resource owners will smooth extraction over time. The model that provides this result can seem opaque to students, but its intuition can be more easily grasped from experience. This paper shares a game that provides that experience. Participants play the role of mine owners who must decide how much to extract in each of two periods. In addition to showing how market pressures moderate intertemporal scarcity, the game also provides lessons about discounting, market power, information, and property rights. I provide all materials needed to play the game immediately or customize it.

Suggested Citation

  • Sarah Jacobson, 2021. "Ore Money Ore Problems: A Resource Extraction Game," Department of Economics Working Papers 2021-10, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2021-10
    DOI: 10.36934/wecon:2021-10
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. I ran Sarah Jacobson's "Ore Money Ore Problems" resource extraction game in class yesterday @SarahJacobsonEc
      by John Whitehead in Environmental Economics on 2023-04-05 08:15:00

    More about this item

    Keywords

    classroom game; natural resource extraction; Hotelling rule; active learning;
    All these keywords.

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market

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