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...

The world economy is affecting ecosystems in a way that puts future living standards at risk. Important issues include global warming, fading resource stocks, scarce water supplies, and decreasing biodiversity. It is broadly ac-accepted that the future of our planet should be one of our major...