Equation 18.8 in the text was given in two forms. The first was given by

= (18.8a)

and the second was given by:

p = ipST + iP (18.8b)

Find the equivalent first-order conditions for optimal extraction of oil (in Chapter 14) and fish (in Chapter 17). Compare 18.8 (a or b)

with those two other results, and try to show what is similar and what is different between them. Note that for fish, the site value will be zero. We shall leave you to ponder whether that is also true for oil.

dST dT i

1 − e−iT p

dS dT pST − k