Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/147207
Authors: 
Duchin, Faye
Levine, Stephen
Year of Publication: 
2015
Citation: 
[Journal:] Journal of Economic Structures [ISSN:] 2193-2409 [Volume:] 4 [Year:] 2015 [Pages:] 1-17
Abstract: 
Resource prices rise when more costly sources need to be exploited. When the world price increases, owners of low-cost sources receive scarcity rents. The magnitude of the rents depends on the range of resource qualities being simultaneously exploited and can represent a substantial transfer of wealth to those with property rights to large stocks of high-quality, easily accessible resources. These rents are bound to increase in the future along with the size of the human population, raised consumption expectations, and deployment of technologies that depend on a wider range of natural resources for their unique properties. We report results for a set of scenarios for a three-region, four-sector, three-resource world economy, where progressively increased consumer demand requires a second and then a third region to extract ore. This numerical example illustrates how the amount of rents transferred to the low-cost producers depends on the size of the low-cost endowments relative to world demand and on the differential costs of extraction relative to the highest-cost producer. The paper develops a framework for tracing global money flows from payments for specific consumer goods in one or more economies to receipts by owners of the embodied factors of production under alternative scenarios about the future. This objective requires a substantial generalization of methods utilized for ex post analysis of input-output databases for past years. For a world economy of m regions, n sectors, and k factors of production, we first compute scenario results using the World Trade Model with Bilateral Trade, then generate the Multiregional Input-Output database corresponding to each scenario, and finally compute a new Consumer-to-Factor Matrix from which the payment network is derived.
Subjects: 
Resource scarcity
Scarcity rents
Global payment network
Global supply chain
Scenario analysis
World Trade Model with Bilateral Trade (WTMBT)
Multiregional Input-Output (MRIO) database
JEL: 
F18
O13
C67
C61
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/4.0/
Document Type: 
Article

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