Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312374 
Year of Publication: 
2022
Citation: 
[Journal:] Journal of Economics [ISSN:] 1617-7134 [Volume:] 137 [Issue:] 3 [Publisher:] Springer Vienna [Place:] Vienna [Year:] 2022 [Pages:] 255-278
Publisher: 
Springer Vienna, Vienna
Abstract: 
Oil discoveries affect global well-being through multiple channels. Focusing on the change in pollution, consumption and extraction cost paths, we build a multi-period model with (endogenous) oil phase out that allows us to assess whether oil windfalls may be welfare-enhancing. The assessment depends on the quality of the discovered resource, expressed as the extraction cost. Our findings suggest that even when faced with high environmental externalities and no internalization mechanism for them, new oil finds can be conducive to welfare. However, there may be no simple threshold below which the discovery is beneficial, but rather multiple intervals into which the extraction costs may fall.
Subjects: 
Oil discovery
Windfall profit
Environmental cost
Herfindahl rule
Extraction cost
Endogenous phase-out
JEL: 
Q32
Q35
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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