A Survey And Critique Of Economic Models Used In The Federal Coal Management Program ? Introduction

One of the advantages of the market¬place, economists believe, is that it automatically generates information which would otherwise be hard to come by. For example, supply and demand signals imply something about private and social sacrifices and benefits. This information is seldom perfect, and can neglect some costs and benefits, but it nevertheless is crucial data. Moreover, marketplaces can also eliminate the need for some information. For example; since market participants are voluntary actors, only those transactions are culminated in which a mutual gain occurs. This eliminates the need for some cost-benefit calculations. A corollary to this standard economic doctrine is that whenever a government or other party supplants a marketplace, it must generate some of the information either lost or newly-needed. (Schultze, 1977) In 1981, following a ten-year moratorium the United States government resumed leasing of publicly-owned coal. When the government designed this program, the goal was to guide the marketplace, rather than merely to respond, as a landlord, to the market's wishes. This goal has been modified somewhat, due both to the changing political climate and to the practical difficulties of implementing so ambitious an undertaking. Nevertheless, during this period of program design and implementation, part of the challenge of creating and using the necessary information fell to the professional modelling fraternity.