THE EXPLORATION AND PRODUCTION OF A LONG-LIVED NATURAL RESOURCE(*)

This paper, a synthesis of previous work by the author, examines both the exploration and the production decisions of a firm in a durable natural resource industry, and finds that monopoly power leads to a slowing in the rate of extraction and a reduction in the exploration rate. Thus in a durable resource industry such as gold, the effect of monopoly is multi-plied: less of the resource will be « discovered », and the stock of the re-source will be extracted more slowly so that early-period prices may be kept above the competitive level.