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In this paper, I develop a model where “exploration” yields information about the size and location of the stock of an exhaustible resource. This information is valuable in two ways. First, before production takes place, reserves must be located through exploration. The process of exploration changes “unproven reserves,” which cannot be produced, into “proven reserves,” which can. One value of exploration, then, is that it allows total production over time to expand (the expansion effect). Second, by exploring in an early time period, a producer gains information about the true stock size prior to making a decision about how fast to exploit reserves. With better information, the extraction rate chosen by the producer...
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The electric utilities of North America have become ever more interconnected via transmission facilities, largely to insure reliability. Current policy discussions regarding transmission include calls for improved access, increased capacity, and deregulation to facilitate trade in electric power. From an environmental perspective, two issues have been notably absent in much of the debate: (1) a recognition of the full range of environmental impacts related to electricity transmission; and (2) the potential for end-use efficiency to address the reliability and economy requirements that motivate attention to transmission. This paper broaches these issues, starting with an elaboration of the environmental impacts,...
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