On the stability of the short-run equilibrium of an exhaustible resource market

Working paper

We consider a Hicksian, two-period economy with an exhaustible resource. There is no forward resource market in the first period; traders form expectations about the second period resource price. Current supply plans are defined implicitly by an asset adjustment mechanism. The current, spot resource price adjusts in proportion to the current, ex-ante excess demand for the resource. We are concerned with the stability of the first-period (short-run or temporary) equilibrium which is defined as the point where asset and spot markets clear and no revision of expectations occurs.

Authors: Stournaras, Y

• Publication status: Published
• Peer review status: Reviewed (other)
• Publisher: Oxford Institute for Energy Studies
• Series: OIES paper
• Publication date: 1984-01-01
• Edition: Publisher's version
• Paper number: M1
• ISBN: 0948061006
• Language: English
• Keywords: exhaustible resource market; instantaneous market clearing equilibrium; spot markets; stability; forward markets; asset adjustment mechanism; second period resource prices; OIES