Econometrica: Jan 1981, Volume 49, Issue 1

Resource Depletion Under Technological Uncertainty<85:RDUTU>2.0.CO;2-F
p. 85-104

Joseph Stiglitz, Partha Dasgupta

The purpose of this paper is to study the effect of uncertainty in the arrival date of a new technology on the rate of depletion of an exhaustible natural resource. It is shown that under a large class of circumstances uncertainty leads to a faster initial depletion rate if the initial resource stock is small and to greater conservation if it is large. A particular kind of certainty equivalence result is proved and the results of the paper are used to comment on possible interpretations of certain historical episodes of resource exhaustion.

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