Open AccessALLOCATIVE EFFICIENCY AND THE SEGMENTATION OF EXHAUSTIBLE RESOURCE OWNERSHIP
Author(s) -
Berck Peter,
Cecchetti Stephen G.
Publication year - 1987
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1987.tb00036.x
Subject(s) - allocative efficiency , microeconomics , resource (disambiguation) , resource allocation , resource productivity , production (economics) , economics , factors of production , capital (architecture) , industrial organization , business , natural resource economics , environmental economics , market economy , computer science , archaeology , history , computer network
This paper shows that a segmentation of resource ownership from the ownership of others factors of production may lead to capital market failure. The paper considers the case where resource owners and users are separate, they both have isoelastic utility, and the production technology is CES in resources and one other factor called labor. When the elasticity of substitution of resources for labor is greater than one, laborers will not purchase and save resources. Their desired extraction path for the resource would be to use more of the resource at the beginning of the planning period than the market allocation provides.