The Economics of Exploration for Non‐renewable Resources

Cairns, Robert D.

doi:10.1111/j.1467-6419.1990.tb00093.x

Cited by 48 publications

(20 citation statements)

References 79 publications

(125 reference statements)

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“…Moreover, uncertainty may also play an important role in terms of resource exploration. Pindyck (1980) and Cairns (1990) noted that the insight provided by the exploration process in a context of certainty is limited. Second, we assumed that marginal extraction cost is constant within a given period.…”

Section: Resultsmentioning

confidence: 99%

Effects of Technological Change on Non-renewable Resource Extraction and Exploration

Sawada

Managi

2014

Economic Structures

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This paper provides a non-renewable resource extraction model with both technological change and resource exploration. Especially, we consider two types of technology, extraction technology and exploration technology. We show how these technologies affect efficient non-renewable resource extraction differently. Then, progress in extraction technology drops marginal revenue of extraction and resource price by changing the structure of those dynamics, while progress in exploration technology drops marginal revenue of extraction and resource price remaining the structure of those dynamics. Finally, we illustrate the difference becomes significant when innovative technologies are developed using numerical examples.

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Section: Resultsmentioning

confidence: 99%

Effects of Technological Change on Non-renewable Resource Extraction and Exploration

Sawada

Managi

2014

Economic Structures

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“…A higher level of exploration activity leads to new mines and more supply 5-10 years later on, but causes higher exploration costs in the present (Hartman and Mutmansky 2002). Optimal levels of exploration activity have been analyzed as well as technological progress and the quality of information (e.g., Pindyck 1978;Radetzki 2008;Cairns 1990).…”

Section: Theoretical Analysismentioning

confidence: 99%

“…Hartman and Mutmansky (2002), Pindyck (1978), Deshmukh and Pliska (1980), Devarajan and Fisher (1982), Swierzbinski and Mendelsohn (1989), Neal (2007), Radetzki (2008), Cairns (1990) Information Costs Technology Exploration success Information Technology Extraction Extraction quantity Hotelling (1931), Gray (1914), Dasgupta and Heal (1974), Solow and Wan (1976), Schulze (1974), Hanson (1980), Hartman and Mutmansky (2002), Krautkraemer (1988Krautkraemer ( , 1989Krautkraemer ( , 1998, Stiglitz (1993), Slade 1982, Heal (1976 Stiglitz (1993), Hotelling (1931), Bodie et al (2002), Bhagwati and Johnson (1961), Brecher and Bhagwati (1981) Interest rate Storage Storage quantity Fama and French (1987), Telser (1958) …”

Section: Hypothesesmentioning

confidence: 99%

Determinants of the Price of High-Tech Metals: An Event Study

et al. 2014

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The growing demand for high-tech products has resulted in strong growth in demand for certain minor metals. In combination with production concentrated in China, this caused strong and unpredicted price movements in recent years. As a result, manufacturing companies have to cope with additional risks. However, the detailed reasons for the price development are only partially understood. Therefore, we analyzed empirically which determinants can be assigned to price movements and performed an event study on the hightech metals neodymium, indium, and gallium. Based on our dataset of news items, we were able to find coinciding events to almost 90% of all price jumps (recall). We showed that if any information about these events occurred with a probability of over 50% there would also be a price jump within 10 days (precision). However, the classical set of price determinants has to be extended for these specific markets, as we found unorthodox factors like holidays or weather that may be indicators for price movements. Therefore, we hope that our study supports industry for instance in performing more informed short-term planning of metals purchasing based on information about specific events.

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“…Exploring new deposits certainly offers an alternative explanation for long-run trends in resource production and prices, and has been modeled by other scholars (Cairns, 1990, see for an overview). However, we illustrate that there is ample evidence that decreasing qualities of deposits has been offset by technological change in extraction over the long-run.…”

Section: Introductionmentioning

confidence: 99%

Non-Renewable Resources, Extraction Technology, and Endogenous Growth

Stuermer

Schwerhoff

2015

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We add an extractive sector to an endogenous growth model of expanding varieties and directed technological change. Firms increase their economically extractable stocks of non-renewable resources through R&D investment in extraction technology and reduce their stocks through extraction. We show how the geological distribution of the non-renewable resource interacts with technological change. Our model accommodates long-term trends in non-renewable resource markets -namely stable prices and exponentially increasing extractionfor which we present data going back to 1792. The model suggests that over the long term, development of new extraction technologies neutralizes the increasing demand for non-renewable resources in industrializing countries such as China.JEL classification: O30, O41, Q30

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The Economics of Exploration for Non‐renewable Resources

Cited by 48 publications

References 79 publications

Effects of Technological Change on Non-renewable Resource Extraction and Exploration

Effects of Technological Change on Non-renewable Resource Extraction and Exploration

Determinants of the Price of High-Tech Metals: An Event Study

Non-Renewable Resources, Extraction Technology, and Endogenous Growth

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