Uncertainty and Exhaustible Resource Markets

@article{Pindyck1980UncertaintyAE,
  title={Uncertainty and Exhaustible Resource Markets},
  author={R. Pindyck},
  journal={Journal of Political Economy},
  year={1980},
  volume={88},
  pages={1203 - 1225}
}
  • R. Pindyck
  • Published 1980
  • Economics
  • Journal of Political Economy
  • Demand and reserve uncertainty are included in a simple model of an exhaustible resource market by allowing the demand function and the reserve level to fluctuate via continuous-time stochastic processes. Thus, producers always know current demand and reserves but do not know what demand and reserves will be in the future. I show that demand uncertainty has no effect on the expected dynamics of market price, while reserve uncertainty shifts the expected rate of change of price only if… CONTINUE READING
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