Munich Personal RePEc Archive

Decreasing of Oil Extraction: Consumption behavior along transition paths

Bazhanov, Andrei (2006): Decreasing of Oil Extraction: Consumption behavior along transition paths.

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Abstract

A normative analysis of the problem of optimal extraction of a non-renewable resource is considered. The economy depends on the essential non-renewable resource and the rate of the resource extraction increases over time. At some instant the government gradually switches to a sustainable (in sense of non-decreasing consumption over time) pattern of the resource extraction. Different approaches are offered for the construction some curves of switching to decreasing paths of the resource depletion. Consumption paths have diverse behavior patterns along these curves, including a path of unlimited growth. A new approach to the Rawlsian maximin criterion which allows for growth of consumption is offered.

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