Publication Type
Journal Article
Version
acceptedVersion
Publication Date
10-2020
Abstract
What effect does the threat of expropriation have on resource extraction? Much of the economic literature suggests that uncertainty reduces investment, but the theory of risk-induced extraction suggests the opposite. In this paper, we test this theory in the context of political violence, which poses a real threat of state destabilization and violent expropriation of property rights. Facing this uncertainty, we find that oil producers in the Middle East and North Africa increase oil production in response to political violence. This finding has important negative consequences for the world in terms of climate change and demonstrates a previously untested mechanism through which exhaustible resource supply is flooding the market.
Keywords
Oil production, Political violence, Hotelling rule, Exhaustible resources, Climate change, Risk-induced extraction
Discipline
Agribusiness | Agricultural and Resource Economics
Publication
Energy Economics
Volume
92
First Page
1
Last Page
16
ISSN
0140-9883
Identifier
10.1016/j.eneco.2020.104935
Publisher
Elsevier
Embargo Period
5-14-2021
Citation
MERRILL, Ryan Knowles and ORLANDO, Anthony W..
Oil at risk: Political violence and accelerated carbon extraction in the Middle East and North Africa. (2020). Energy Economics. 92, 1-16.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6700
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.eneco.2020.104935