Three essays on the exploration for non-renewable resources

The purpose of this thesis is to analyze three aspects of exploration activity. In the first essay a new additional motive for exploration activity is proposed. When exploration occurs before the associated resource is extracted, imperfectly competitive resource firms have an incentive to use exploration activity as a strategic instrument with which to capture greater market shares and inflict capital losses on rivals. In an international setting this provides an incentive for governments to use strategic taxation to capture greater rents from the imperfectly competitive world output markets. Analytic expressions for the optimal domestic extraction tax and the optimal domestic exploration subsidy are presented.;In the third essay, annual Canadian data are used to estimate a stochastic and dynamic model of oil exploration and extraction in Alberta. The parameters of the model are estimated using the Generalized Method of Moments estimator proposed by Hansen (1982). The main determinants of current period extraction are one period lagged extraction and one period expected extraction. The long run elasticity of oil supply with respect to domestic oil prices is 0.0234. The main determinants of current period exploration are one period lagged cumulative exploration and a relative price variable. The long run elasticity of exploration effort to changes in relative prices is 1.2091.;In the second essay, annual Canadian exploration data are used to estimate a multiple-output translog exploration cost function. A new definition of depletion is introduced and its estimated coefficient is found to be statistically significant. Another novel feature is the application of Monte Carlo integration techniques to ensure the estimated cost function satisfies concavity and monotonicity. The fitted cost function parameters are then used to obtain estimates of the marginal cost of exploration for oil and gas. These marginal cost estimates are employed, along with previous estimates of exploration rents, to measure resource scarcity. For oil there is a 10.0% per year increase in scarcity along the trend line while for natural gas there is a 1.8% per year increase in scarcity along the trend line.