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A Spatial Approach to Energy Economics: Theory, Measurement and Empirics

Abstract

This paper sets out a simple spatial model of energy exploitation to ask how the location and productivity of energy resources may affect the distribution of economic activity around the globe. This is a very large research question, and we take one small step towards answering it by combining elements from resource and energy economics into one framework that links the spatial productivity of energy sources (both renewable and non-renewable) to the incentives for economic activity to concentrate. Our theory provides a novel scaling law; a magnification effect; and reveals a complementarity between infrastructure investment and spatially productive energy resources. Our empirical work provides estimates of key model attributes and reviews related empirical work supporting our approach.
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