Abstract
Possible interpretations of the concept of scarcity in extractive resource markets are presented and then related to traditional economic ideas of efficient patterns of resource use. Sources of inefficiency in resource markets are then considered, with the main emphasis being on disequilibrium. Various simple models of disequilibrium suggest that resource markets are more stable if traders’ expectations are based on quantity rather than price information, so that the provision of such information increases efficiency.
I am grateful to Graciela Chichilnisky and Partha Dasgupta for valuable comments.
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Notes
The detailed references are to Anthony C. Fisher, “Measures of natural resource scarcity” in Scarcity and Growth Reconsidered, ed. V. Kerry Smith, John Hopkins Press, 1979, and V. Kerry Smith, “The evaluation of natural resource adequacy: Elusive quest or frontier of economic analysis” in Land Economics, 1980.
V. Kerry Smith, “The evaluation of natural resource adequacy: Elusive quest or frontier of economic analysis” in Land Economics, 1980.
Harold J. Barnett and Chandler Morse, Scarcity and Growth. Johns Hopkins Press, 1963.
These conditions are clearly set out in, for example, T. C. Koopmans, “The price system and the allocation of resources”, in T. C. Koopmans, Three Essaya on the State of Economic Science. See also chapter two of P. S. Dasgupta and G. M. Heal, Economic Theory and Exhaustible Resources, Cambridge Economic Handbooks, 1979, for a discussion related to the present context.
H. Hotelling, “The economics of exhaustible resources”, Quarterly Journal of Economics, 1931.
G. Chichilnisky, “Oil supplies, industrial output and prices: A simple general equilibrium macro analysis,” Essex Economics Paper, Jan. 1981.
G. M. Heal and M. Barrow, “The influence of interest rates on metal price movements”, in Review of Economic Studies, 1980 and also G. M. Heal and M. Barrow, in Economic Letters, forthcoming and in Modelling Natural Resource Price Movements: Current Developments in Theory and Practice (ed. V. K. Smith), forthcoming.
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© 1982 The Scandinavian Journal of Economics
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Heal, G. (1982). Scarcity, Efficiency and Disequilibrium in Resource Markets. In: Matthiessen, L. (eds) The Impact of Rising Oil Prices on the World Economy. Scandinavian Journal of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06361-1_13
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DOI: https://doi.org/10.1007/978-1-349-06361-1_13
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