Competitive Scarcity with Exploration

  • Matthias Ruth
  • Bruce Hannon
Part of the Modeling Dynamic Systems book series (MDS)

Abstract

In the previous models we assumed the extractive process to be the only force changing the reserve size. In reality, other forces play a role, too, in determining the size of the reserve. Among those are exploration and discovery. The rate of exploration E (e.g., the rate of feet drilled per year in search of oil) controls the discovery rate (D), which, in turn, directly affects discovery cost (DC). Assume that this relation between exploration and discovery rate is given by
$$ D = 200.4*{{E}^{{BETA}}} $$
(1)
and that the relation between discovery cost and the rate of exploration is
$$ DC = 3*{{E}^{{ALPHA}}} $$
(2)
The change of the exploration cost per unit of the resource found is called the marginal discovery cost (MDC).

Keywords

Monopoly 

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Copyright information

© Springer-Verlag New York, Inc. 1997

Authors and Affiliations

  • Matthias Ruth
    • 1
  • Bruce Hannon
    • 2
  1. 1.Center for Energy and Environmental Studies and the Department of GeographyBoston UniversityBostonUSA
  2. 2.Department of GeographyUniversity of IllinoisUrbanaUSA

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