Abstract
Stollery (Can J Econ 31(3):730–742, 1998) studied a polluting oil-extracting economy governed by a constant utility criterion. The pollution, resulted from oil use, negatively affected production and utility. Stollery provided a closed-form solution for the case where only the production function was affected by the damage. This paper offers a closed-form solution to a non-trivial example of this economy with damage in the utility function. The solution is used for the analysis of uncertainties in resource policy caused by uncertainties in reserve estimate and in the intensity of the damage.
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Bazhanov, A.V. A Closed-Form Solution to Stollery’s Problem with Damage in Utility. Comput Econ 39, 365–386 (2012). https://doi.org/10.1007/s10614-010-9249-4
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DOI: https://doi.org/10.1007/s10614-010-9249-4
Keywords
- Essential nonrenewable resource
- Polluting economy
- Sustainable development
- Special function representation
- Uncertainties in resource policy