Institutional Structures and Policies in an Environment of Increasingly Scarce and Expensive Resources: A Fixed Cost Perspective

17 Pages Posted: 7 Dec 2010

See all articles by Jing Chen

Jing Chen

University of Northern British Columbia - School of Business

James K. Galbraith

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs; Levy Economics Institute of Bard College

Date Written: December 6, 2010

Abstract

In this paper, we provide a model that permits systematic and even quantitative assessment of the policy implications of increasingly scarce and expensive resources. Specifically we model the return to investment as a function of fixed cost, discount rate, uncertainty, project duration and the volume of output. Institutions can be understood as the accumulation of past fixed investments, which lower the variable cost of economic activities but constrain choices open to future policymakers. How much to invest in fixed assets and how institutions respond to a changing environment are the key questions as the cost of nonrenewable resources rises.

Suggested Citation

Chen, Jing and Galbraith, James K., Institutional Structures and Policies in an Environment of Increasingly Scarce and Expensive Resources: A Fixed Cost Perspective (December 6, 2010). Available at SSRN: https://ssrn.com/abstract=1721156 or http://dx.doi.org/10.2139/ssrn.1721156

Jing Chen (Contact Author)

University of Northern British Columbia - School of Business ( email )

Prince George, BC, V2N 4Z9
Canada
250-960-6480 (Phone)
250-960-5544 (Fax)

HOME PAGE: http://web.unbc.ca/~chenj/

James K. Galbraith

University of Texas at Austin - Lyndon B. Johnson School of Public Affairs ( email )

2300 Red River St., Stop E2700
PO Box Y
Austin, TX 78713
United States
512-471-1244 (Phone)

Levy Economics Institute of Bard College

Blithewood
Annandale-on-Hudson, NY 12504
United States
845-758-7700 (Phone)
845-758-1149 (Fax)

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