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

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.eneco.2020.104935

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