Measurement of the in situvalue of exhaustible resources An.pdfVIP

E C O L O G I C A L E C O N O M I C S 6 2 ( 2 0 0 7 ) 4 9 0 – 4 9 5 ava i l a b l e a t w w w. s c i e n c e d i r e c t . c o m w w w. e l s ev i e r. c o m / l o c a t e / e c o l e c o n ANALYSIS Measurement of the in situ value of exhaustible resources: An input distance function Myunghun Lee⁎ Department of International Trade, Inha University, 253 Yonghyun-dong, Nam-gu, Incheon 402-751, South Korea A R T I C L E I N F O A B S T R A C T Article history: We develop a methodology to derive the shadow .in situ price of nickel by utilizing an input Received 13 January 2006 distance function, which can improve upon previous estimates. Our estimates hold Received in revised form regardless of market power and actual cost minimization. The time path of the shadow .in 27 June 2006 situ price is obtained using annual data for Inco, a nickel company. Empirical results suggest Accepted 6 July 2006 a slightly increasing .in situ price of nickel over the period 1947–92, but the dynamic Available online 17 August 2006 optimality condition does not hold. Comparison with the time path of the .in situ price obtained by estimating a cost function indicates a sizable discrepancy between the two time Keywords: trajectories. Input distance function © 2006 Elsevier B.V. All rights reserved. .In Situ value Scarcity 1. I