Werf, Edwin van der; Smulders, Sjak - Fondazione ENI Enrico Mattei (FEEM) - 2007
We study how restricting CO2 emissions affects resource prices and depletion over time. We use a Hotelling-style model with two non-renewable fossil fuels that differ in their carbon content (e.g. coal and natural gas) and in addition are imperfect substitutes in final good production. We show...