land or a mature forest; cost, productivity, and demand conditions; and leasing of
Ownership arrangements. If, for example, a forest is to be used for pulp to make paper,
the size of the stems and trunks is not important, but the volume
Monopoly Oil Extractor Facing Competitive Backstop Supply
Monopolist maximizes present value of profit by getting rid of its stock first. It does
this exhaustion in TWO PHASES. Some stock goes in an ordinary
d mr (t ) c M
= r phase.
mr (t ) c M
Journal of Economic PerspectivesVolume 18, Number 1Winter 2004Pages 191214
Is Housing Unaffordable? Why Isnt It
John M. Quigley and Steven Raphael
First, housing is the singfe largest expenditure item in the budgets of most
families and i
Monopolist with stock SM (extract cost cM) and competitive fringe with stock SF (extract
cost cF) agree at time zero on overall path which maximizes each profit given path
of the other.
Path (a) competitive fringe goes first,
d p(t )
(gulf ZR;I-W bsumt/ Maggi, F:_%g@
T . 4'73:th f=4#c
C 5.;ff-Je :HeSPQ-c
.3111 : 650
14% mar/\ W
- + a ' " = 3 0x
My # _,r_, , /_#_r_
- ,. f .
r _ "rt _ 2 Fri-cfw_-
le [T g BMW 45
5 a 5
"t (T rt r kt] 4,27%
cfw_(-1 -_ @733 Lug
Suburban Employment Centers
The textbook monocentric city has all jobs in the center. Workers commute from their
residences in an area around the center, the residential area. We can introduce jobs in an
outer ring quite easily if (a) we assume that all "
Harvesting from a Private Lake (Soc. Opt.):
B (Qt ) is current payoff (area under the demand curve) for catch Qt .
C (Qt , St ) is current harvest cost for Qt given stock St in the lake (larger St means lower
cost to catch Qt ).
Organize sequence of harve
Durable Exhaustible Resource Extraction
Once extracted, Qt accumulates above ground and continues to yield services (e.g. gold,
( B t =) pt
Q0 + Q1 + . + Qt 1
No rusting assumption means every quantity extracted continues to yield ser
Hotelling : Industry Extraction Model
Competitive outcome follows from max PV of consumer and producer surpluses.
At date t, Q(t) is extracted from say Q(t) tiny firms each with ONE ton of oil.
George Bissel visits oil springs in
Colonel Drake drills rst well at
American Civil War.
John D. Rockefeller forms Standard
South Improvement Company stirs
Sustainable Investment Policy
An oil exporting nation has interest rFt plus profit (qt ) to spend each period on
consumption Ct plus investment I t .
d (qt )
When I t is equal to current exhaustible resource rent qt
and I t goes into
Samuelson Neutral Corporate Taxation:
(a) Allow the firm deductibility of true economic depreciation before tax
(b) Allow interest payment from borrowing deductibility (this changes discount
rate from r to r (1 ), for the tax rate. )
Denote depreciation b
Fundamentals of Futures and Options Markets, 7th Ed, Ch 4, Copyright John C. Hull 2010
Types of Rates
Fundamentals of Futures and Options Markets, 7th Ed, Ch 4, Copyright John C. Hull 201
Hedging Strategies Using
Fundamentals of Futures and Options Markets, 7th Ed, Ch3, Copyright John C. Hull 2010
Long & Short Hedges
long futures hedge is appropriate when
you know you will purchase an asset in
the future and want to l