Uncertainty and Markets for Renewable Resources, Journal of Economic Dynamics and Control
The market allocation of renewable resources is examined when growth rates are affected by random disturbances. Given free access to a renewable resource, environmental disturbances are shown to affect the biological survival of the resource. The optimal solution is then examined and it is shown to be achieved by a competitive allocation when property rights are clearly defined given rational expectations or a complete set of contingent futures markets. The stochastic dynamics are shown in each case to differ considerably from the deterministic model.
Leonard J. Mirman, Daniel Spulber
Mirman, J. Leonard, and Daniel Spulber. 1984. Uncertainty and Markets for Renewable Resources. Journal of Economic Dynamics and Control. 8(3): 239-264.