MYOPIA, EMMETROPIA OR HYPERMETROPIA - COMPETITIVE MARKETS AND INTERTEMPORAL EFFICIENCY IN THE UTILIZATION OF EXHAUSTIBLE RESOURCES

Despite frequent references to myopia in the literatures of economics and the social sciences more generally, little consideration has been given to the possibility of a converse form of misperception, hypermetropia, and to the formulation of empirical tests for myopia and hypermetropia vis-à-vis emmetropia ('correct' relative weighting of the present and future). The focus of this analysis is on the identification of myopia/hypermetropia in markets for exhaustible resources. Surprisingly, the study finds suggestive evidence that hypermetropia may be more pervasive than myopia in primary resource markets ie that present and future welfare could be enhanced through increased present utilization of resources together with increases in investment, simply because the rate of return to capital (as reflected in interest rates) appears to be greater than rates of return to resources transferred from the present to the future (as reflected in the rate of increase of resource prices). © 1990.