Econometrica: Jan 1981, Volume 49, Issue 1
Resource Depletion Under Technological Uncertainty
Joseph Stiglitz, Partha DasguptaThe 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.
Log In To View Full Content