Normative Models of Depletable Resources.
Abstract
The major theme of this work is the integration of depletable resources supply and sectoral dynamic models. These models are inherently normative due to their mathematical programming formulations. The economic sectors that demand the depletable resource minimize in each time period the cost of meeting the demand for end-use goods. The suppliers allocate the fixed resource stock over time such as to maximize the net present value of profits. Equilibrium is defined by linking the suppliers' revenue with sectoral savings in costs. Mathematical programming concepts, particularly decomposition methods, facilitate the integration of these models. Some extensions are discussed and implemented in this context: essential versus inessential resources, the existence of institutional agents and capacity constraints on resource extraction. Finite-horizon approximation methods for the case of infinite planning horizons are presented. These are of particular interest in the integration of transient and stationary stage models. Leontief substitution systems are also considered. Finite-elasticities in the demand for end-use goods and the supply of alternative primary supplies add more flexibility to the equilibrium model. Linear relationships can be effectively handled by the development of parametric quadratic programming.
Document Details
- Document Type
- Technical Report
- Publication Date
- May 01, 1978
- Accession Number
- ADA055736
Entities
People
- Eduardo M. Modiano
Organizations
- Massachusetts Institute of Technology