A Closed-Form Solution to Stollery’s Problem with Damage in Utility

Stollery (Can J Econ 31(3):730–742, 1998 ) studied a polluting oil-extracting economy governed by a constant utility criterion. The pollution, resulted from oil use, negatively affected production and utility. Stollery provided a closed-form solution for the case where only the production function w...

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Bibliographic Details
Published in:Computational economics 2012-04, Vol.39 (4), p.365-386
Main Author: Bazhanov, Andrei V.
Format: Article
Language:English
Subjects:
Behavioral/Experimental Economics
Climate change
Computer Appl. in Social and Behavioral Sciences
Consumption
Damage
Economic models
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Energy resources
Environmental policy
Essential nonrenewable resource
Global warming
Government policy
Investments
Math Applications in Computer Science
Non-renewable resources
O13
Oil
Operations Research/Decision Theory
Per capita
Polluting economy
Pollution
Production functions
Productivity
Q32
Q38
Resource policy
Special function representation
Studies
Sustainable development
Uncertainties in resource policy
Uncertainty
Utility functions
Utility theory
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Summary:Stollery (Can J Econ 31(3):730–742, 1998 ) studied a polluting oil-extracting economy governed by a constant utility criterion. The pollution, resulted from oil use, negatively affected production and utility. Stollery provided a closed-form solution for the case where only the production function was affected by the damage. This paper offers a closed-form solution to a non-trivial example of this economy with damage in the utility function. The solution is used for the analysis of uncertainties in resource policy caused by uncertainties in reserve estimate and in the intensity of the damage.
ISSN:0927-7099
1572-9974
DOI:10.1007/s10614-010-9249-4