On the Transition from an Exhaustible Resource Stock to an Inexhaustible Substitute

A country possesses an exhaustible and non-renewable resource stock, say oil. It also knows how to produce a perfect flow-substitute, say solar energy. Sooner or later the country must look to the sun rather than its oil wells as its primary or only source of energy. Both the extraction of oil and the harnessing of the sun may be costly. In particular, the production of solar energy may entail set-up costs as well as conventional scale-dependent costs. 2 These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.