Oil producing countries' discount rates
The small LDCs which own the great bulk of oil resour- ces are rational agents and calculate with short horizons and high discount rates. They have pre-commitments to spend much (or even more than all) of their incomes, hence behave like highly leveraged corporations. They are also undiversi...
| Main Author: | |
|---|---|
| Format: | Working Paper |
| Language: | en_US |
| Published: |
MIT Energy Lab
2005
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| Online Access: | http://hdl.handle.net/1721.1/27262 |
| _version_ | 1826212033167622144 |
|---|---|
| author | Adelman, Morris Albert |
| author_facet | Adelman, Morris Albert |
| author_sort | Adelman, Morris Albert |
| collection | MIT |
| description | The small LDCs which own the great bulk of oil resour-
ces are rational agents and calculate with short horizons and
high discount rates. They have pre-commitments to spend much (or
even more than all) of their incomes, hence behave like highly
leveraged corporations. They are also undiversified, hence the
risk factors are set not by covariance with a diversified
portfolio or sources of income, but rather by the variance of the
oil income stream itself. Political risk is additional. High
discount rates act both to raise and lower the depletion rate, so
the net effect is indeterminate without knowledge of costs, not
considered here. High discount rates sharply lower the effective
elasticity of demand, and lead to a cartel policy of "take the
money and run." |
| first_indexed | 2024-09-23T15:15:23Z |
| format | Working Paper |
| id | mit-1721.1/27262 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T15:15:23Z |
| publishDate | 2005 |
| publisher | MIT Energy Lab |
| record_format | dspace |
| spelling | mit-1721.1/272622019-04-12T11:21:49Z Oil producing countries' discount rates Adelman, Morris Albert The small LDCs which own the great bulk of oil resour- ces are rational agents and calculate with short horizons and high discount rates. They have pre-commitments to spend much (or even more than all) of their incomes, hence behave like highly leveraged corporations. They are also undiversified, hence the risk factors are set not by covariance with a diversified portfolio or sources of income, but rather by the variance of the oil income stream itself. Political risk is additional. High discount rates act both to raise and lower the depletion rate, so the net effect is indeterminate without knowledge of costs, not considered here. High discount rates sharply lower the effective elasticity of demand, and lead to a cartel policy of "take the money and run." National Science Foundation, SES-8412971 and Center for Energy Policy Research of the M.I.T. Energy Laboratory 2005-09-15T14:44:21Z 2005-09-15T14:44:21Z 1986 Working Paper 19524024 http://hdl.handle.net/1721.1/27262 en_US MIT-EL 86-015WP 1761170 bytes application/pdf application/pdf MIT Energy Lab |
| spellingShingle | Adelman, Morris Albert Oil producing countries' discount rates |
| title | Oil producing countries' discount rates |
| title_full | Oil producing countries' discount rates |
| title_fullStr | Oil producing countries' discount rates |
| title_full_unstemmed | Oil producing countries' discount rates |
| title_short | Oil producing countries' discount rates |
| title_sort | oil producing countries discount rates |
| url | http://hdl.handle.net/1721.1/27262 |
| work_keys_str_mv | AT adelmanmorrisalbert oilproducingcountriesdiscountrates |