1、Chapter 6 The Allocation of Depletable and Renewable Resources: An Overview Contents: 7.1 Introduction 7.2 A Resource Taxonomy 7.3 Efficient Intertemporal Allocation 7.4 Market Allocation 7.5 Summary 7.1 Introduction Main contents in chapter 7: Defining and discussing a simple but useful resource ta
2、xonomy ( classification system ), as well as explaining the dangers of ignoring the distinctions made by this taxonomy. Defining an efficient allocation of an exhaustible resource over time when no renewable substitute in available. 7.1 Introduction Main contents in chapter 7: Characterize efficient
3、 extraction paths for renewable and depletable resources, assuming that they are perfect substitutes, and how these efficient paths are affected by changes in the nature of the cost function. Analyzing whether or not the market is capable of yielding a dynamically efficient allocation in the presenc
4、e or absence of a renewable substitute. 7.2 A Resource Taxonomy（资源分类） Three separate concepts are used to classify the stock of depletable resources（可耗竭资源）: Current reserves（当前储备）（当前储备）: defined as known resources that can profitably be extracted at current prices. Potential reserves（潜在储备）（潜在储备）: de
5、fined as a function rather than a number. The amount of reserves potentially available depends upon the price people are willing to pay. Resource endowment（资源禀赋）（资源禀赋）: represents the natural occurrence of resource in the earths curst. 7.2 A Resource Taxonomy Other distinctions among resource catego
6、ries are also useful: Depletable resources（可耗竭资源）（可耗竭资源）: are one for which the natural replenishment feedback loop can safely be ignored. Renewable resources（可再生资源）（可再生资源）: are differentiated from depletable resources primarily by the fact that natural replenishment augments the flow of renewable r
7、esources at a non-negligible rate. 7.3 Efficient Intertemporal Allocation 7.3.1 The Two-Period Model Revisited 7.3.2 The N- Period Constant-Cost Case 7.3.3 Transition to a Renewable Substitute 7.3.4 Increasing Marginal Exaction Cost 7.3.5 Exploration and Technological Progress 7.3.1 The Two-Period M
8、odel Revisited In summary, two-period model suggests that an efficient allocation of a finite resource with a constant marginal cost （边际成本） of extraction involves rising marginal user cost（边际使用者成 本） and falling quantities consumed. 7.3.2 The N-Period Constant-Cost Case Assumption: Depletable resourc
9、e（可耗竭资源） with no substitute（替代资源）: MC=2, Q=40, r=0.1 Demand function（需求函数）: P=8-0.4q N-period NB! First of all, in this case as in the two-period case, the efficient marginal user cost （边际 使用者成本）rises steadily in spite of the fact that the marginal cost of extraction （边 际开采成本）remains constant. This
10、rise in the efficient marginal user cost reflects increasing scarcity（稀缺） and the accompanying rise in the opportunity cost （机会成本） of current consumption. NB! In response to these rising costs over time, the quantity extracted falls over time until it finally goes to zero. Thus, even there is no inc
11、rease in the cost of extraction（开采成 本）, an efficient allocation envisions a smooth transition to the exhaustion of a resource. 7.3.3 Transition to a Renewable Substitute Assumption: depletable resource: Q=40，MC=2， r=0.1 Substitute renewable resource: MC=6 Demand function: P=8-0.4(Qt+Qst) NB! In this
12、 efficient allocation, the transition is once again smooth. The depletable resource would be exhausted sooner than it would have been without the renewable resource substitute. 7.3.4 Increasing Marginal Extraction Cost Assumption: Depletable resource with substitute renewable resource Marginal cost
13、of extracting the depletable resource rises with the cumulative amount extracted Compare Analysis: The constant- cost case The increasing- cost case Change of Marginal user cost Rise over time at rate r Decline over time Change of depletable resource reserve Completely exhausted Not exhausted 7.3.5
14、Exploration and Technological Progress Exploration of new resources Technological progress 7.4 Market Allocation We have examined in detail how the efficient allocation of substitutable, depletable, and renewable resources over time would be defined in a variety of circumstances. Can actual markets
15、be expected to produce an efficient allocation? 7.4 Market Allocation As long as social and private discount rates coincide, property right structures（产权结 构） are well defined, and reliable information about future prices is available, the markets in which those resources are bought and sold will lea
16、d to efficient allocation. 7.4 Market Allocation Two different effects of environmental cost（环境成本）: On the demand side On the supply side Which effect dominates - the demand effect or the supply effect? Objectives & Requirements: Grasp the resource taxonomy Understand the N-period model in different conditions and their implication
