The Behavior of Resource Explorating Firm under Stochastic World

In this paper, we will be mainly concerned with resource exploration problem under uncertainty. Much of papers in this area have been written in deterministic context. And under the exhaustible resources assumption, their obtained results were the optimal behavior of price or the optimal policy about extraction rate. However, we deal with the resource exploration problems under the assumption that resource is unexhaustible while only the firm which has the royalty can extract the resource. The royalty of extraction is given to the firm that succeeds in exploration at first, and all other firms couldn’t extract the resources. Under these circumstances, each firm will invest for the exploration for the purpose of acquiring the right of extraction. In other words, they content with the success of exploration. In what follows, we will acquire for the optimal condition of exploration under uncertainty.