-4- Exhaustibility and the Reserves/Production Ratio Robert E. Marks Graduate School of Business, Stanford University. (until end-August 1993) Australian Graduate School of Management, University of New South Wales. bobm@agsm.unsw.edu.au and Peter L. Swan Australian Graduate School of Management, University of New South Wales. JEL classification number: Q30 ABSTRACT: We derive a simple equilibrium relationship, under static expectations, among the reserves/production ratio for an exhaustible resource, the price elasticity of the demand for the flow of extracted resource, and the implicit discount rate. Acknowledgements: The authors wish to thank Sumner La Croix and Robert Kohn for their advice. The research was partly supported by the Australian Research Council and the Graduate School of Business, Stanford. (For reprint order form): The first author’s present address (until mid-August 1993) is the Graduate School of Business, Stanford University, Stanford, CA 94305-5015, USA; thereafter, the Australian Graduate School of Management, University of New South Wales, Kensington, NSW 2033, Australia.