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Does an Exhaustible Resource Usually Have Many Near‐Optimal Depletion Paths?
Author(s) -
Rowse John
Publication year - 1988
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1241503
Subject(s) - economics , resource depletion , resource (disambiguation) , yield (engineering) , function (biology) , principal (computer security) , mathematical economics , marginal cost , microeconomics , mathematical optimization , computer science , mathematics , ecology , biology , computer network , materials science , evolutionary biology , metallurgy , operating system
Abstract In a recent article Chapman finds that different depletion paths for a highly abstract world oil model yield objective function values close to the optimal level. In this article the near optimality of Chapman's marginal cost pricing solution is explained and many other near‐optimal solutions to his competitive model are identified. Furthermore, evidence is cited that multiple near optima emerge from numerical exhaustible resource models incorporating several important real‐world complexities and reasons for this occurrence are provided. The principal implications for public policy and economic theory are also discussed.