Geological constraints are considered in the context of a Hotelling type extraction-exploration model for an exhaustible resource. It is shown that such constraints, in combination with initially small reserves and strictly convex exploration costs, can coherently explain bellshaped peaks in...

This paper uses data on world oil price and consumption to calibrate a Hotelling model of optimal resource extraction with unlimited potential reserves when costs exhibit stock effects. Numerical solutions are generated for various specifications of the elasticity of demand for both isoelastic...

The financial concept of real options has important consequences in areas of environmental and natural resources law where irreversible decisions are made in the face of uncertainty. This article argues that consideration of real options is necessary to maximize economic return from...