Modeling of Nonrenewable Resources
This chapter is devoted to an important economic–environmental problem: the modeling of the optimal extraction and utilization of nonrenewable (exhaustible) resources. Nonrenewable resources are natural resources that cannot be replaced as quickly as they are being consumed. Examples of such resources include fossil fuels (petroleum, coal, and natural gas) and mineral resources (iron, gold, and other). The models of Section 10.1 consider the resource extraction process in isolation from other economic activities. Section 10.2 investigates the economic growth model with a two-factor Cobb–Douglas technology that uses physical capital and exhaustible resource to produce aggregate product.
KeywordsOptimal Control Problem Shadow Price Nonrenewable Resource Resource Extraction Extraction Period
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