Does Productive Capital Affect the Order of Resource Exploitation?
Date
01.01.2000
01.01.2000
Authors
Pascal Favard
JEL Code
Q3
Q3
Keywords:
Natural resources,substitute,productive capital,general equilibrium
Natural resources,substitute,productive capital,general equilibrium
Publisher
Climate Change and Sustainable Development
Climate Change and Sustainable Development
Editor
Carlo Carraro
Carlo Carraro
The purpose of this paper is to show that in a general equilibrium framework it is never optimal to use high cost substitute after lower cost exhaustible resource even if it is possible to accumulate productive capital. Indeed if the high cost substitute is scarce it is always optimal to consume it simultaneously with a lower cost stock. Moreover it may be optimal to consume the high cost substitute before using a lower cost resource.