Exploration can cause falling non-renewable resource prices

This note shows that when marginal exploration costs are increasing in the rate of exploration that it is possible to observe non-renewable resource prices falling over a portion of the extraction profile. Thus, while the model of Pindyck (J. Polit. Econ. 86 (1978) 841) was based on an incorrect specification of the aggregate extraction cost function, its general conclusion that exploration can cause falling non-renewable resource prices is upheld. This result is in contrast to Mendelsohn and Swierzbinski (Int. Econ. Rev. 30 (1989) 175), who assumed that marginal extraction costs were constant.