Non-renewable Natural Resources:

Some natural resources are non-renewable, and if used  extensively, will get exhausted. In other words, non-renewable resources are available in  fixed  quantities. For  policy  makers, exploitation and  use of  such  resources depends  on  the  price function and market structure. For non-renewable resources, the life cycle, price and usefulness of the resource determine the extent  it  is used  in  society.  For  such  resources, market  structure assumes particular  importance.

Formation of cartels is prevalent in several metals and  commodities  like bauxite, copper and  oil. An  example from the  international petroleum industry  is apt in this context. The Organisation of the  Petroleum  Exporting Countries  (OPEC)  is  an international organization set up  in  1960 and consists of the oil producing countries.

Studies have shown that there are considerable gains from cartelization in  the case of petroleum and bauxite due to the high market share held  by  the cartel and a relatively inelastic  demand  structure  (see  Hanley  et  al.  1997). There  is  also a  tendency of constituting apex bodies at global  level to keep a check on the prices and availability of several commodities. Other factors that  impinge upon  the market price of a non- renewable  resource depend  upon  the  cost of extraction technology and  cumulative resource depletion.