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Spatial Dynamics and Optimal Resource Extraction

Crawford School of Public Policy | Arndt-Corden Department of Economics

Event details

PhD Seminar (Econ)

Date & time

Friday 26 February 2010
9.30am–11.00am

Venue

Seminar Room 4, Crawford School of Public Policy, #132 Lennox Crossing, ANU

Speaker

Pamela Katic, Phd Candidate IDEC (Discussant: Qiang Jiang)

Contacts

Sandra Zec
6125 2188
Panel Members:

Prof Quentin Grafton and Dr Michael Ward

Abstract:

Extraction from a common pool resource may result in a divergence between competitive and optimal rates of extraction. This article develops a theoretical model to estimate the size of the payoffs from this divergence under alternative spatial representations. Results show that when a resource is heterogeneously distributed spatially, assuming a spatially homogeneous distribution can underestimate the losses with competitive extraction. An application of the model to a real-world aquifer shows the importance of recognizing spatial heterogeneity in resource extraction problems to: (1) provide robust estimates of the costs of sub-optimal extraction and; (2) implement appropriate corrective policies.

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