Optimising the extraction rate of a non-durable non-renewable resource in a monopolistic market: a mathematical programming approach

Abstract

We assume a monopolistic market for a non-durable non-renewable resource such as crude oil, phosphates or fossil water. Stating the problem of obtaining optimal policies on extraction and pricing of the resource as a non-linear program allows general conclusions to be drawn under diverse assumptions about the demand curve, discount rates and length of the planning horizon. We compare the results with some common beliefs about the pace of exhaustion of this kind of resources.