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Reserve Lifetime and Depletion in Exhaustible Resource Extraction Under Uncertainty
Department of Economics, Knut Wicksell Centre for Financial Studies, School of Economics and Management, Lund University, Lund, Sweden.
2014 (English)Report (Other (popular science, discussion, etc.))
Abstract [en]

This paper studies the implications for reserve lifetime and related quantities in a continuous time model of resource extraction under uncertainty. Both the resource price and the extracted amount are assumed to follow stochastic processes. Reserve lifetime is determined by the profit-maximizing firms optimal decision of when to close down production. We derive closed form expressions for the expected value and the probability distribution of reserve lifetime, the expected level of depletion, and the expected streams of discounted revenues and costs until closing.

Place, publisher, year, edition, pages
SSRN , 2014. , p. 28
Series
SSRN Working papers
Keywords [en]
Resource extraction, optimal stopping, reserve lifetime, depletion, real options
National Category
Economics
Identifiers
URN: urn:nbn:se:oru:diva-76686DOI: 10.2139/ssrn.2362512OAI: oai:DiVA.org:oru-76686DiVA, id: diva2:1353884
Note

JEL Classification: Q30, G11, G13, M11, C61, C41, C44

Available from: 2019-09-24 Created: 2019-09-24 Last updated: 2019-09-24Bibliographically approved

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Reserve Lifetime and Depletion in Exhaustible Resource Extraction Under Uncertainty(233 kB)52 downloads
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Larsson, Karl

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3536373839404138 of 157
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf