The Theory of Exhaustible Resource USE: A Basic Model *

In this paper a relatively simple basic model of resource exploitation is developed both as a framework for subsequent analysis and as a means of directly answering some basic questions associated with resource scarcity. In the model presented the only factors of production explicitly acknowledged are natural resources. This simplification is justified on two grounds: (i) the gain in mathematical simplicity achieved by ignoring the roles of capital and labour makes it possible to encompass more problems than otherwise; and (ii) the essential features of these problems are most conveniently isolated when natural resources are the only inputs.