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Whither Hotelling: Tests of the Theory of Exhaustible Resources

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  • Margaret E. Slade
  • Henry Thille

    ()
    (Department of Economics, The University of British Columbia, Vancouver, British Columbia, V6T 1Z1, Canada
    Department of Economics, The University of Guelph, Guelph, Ontario, N1G 2W1 Canada)

Abstract

We review the empirical literature that extends and tests the Hotelling model of the optimal depletion of an exhaustible resource. The theory is briefly described to set the stage for the review of empirical tests and applications. Those tests can be roughly divided into two broad categories—descriptive and structural—and we discuss the strengths and weaknesses of each before presenting the empirical studies of optimal extraction under conditions of exhaustibility. We also discuss some econometric pitfalls that applied researchers face when attempting to test the model.

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Bibliographic Info

Article provided by Annual Reviews in its journal Annual Review of Resource Economics.

Volume (Year): 1 (2009)
Issue (Month): 1 (09)
Pages: 239-259

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Handle: RePEc:anr:reseco:v:1:y:2009:p:239-259

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Related research

Keywords: Hotelling model; optimal extraction; empirical tests; oil and gas; nonfuel minerals;

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References

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Citations

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Cited by:
  1. Colin A. Carter & Gordon C. Rausser & Aaron Smith, 2011. "Commodity Booms and Busts," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 87-118, October.
  2. Calvin Atewamba & Gérard Gaudet, 2012. "Prices of Durable Nonrenewable Natural Resources under Stochastic Investment Opportunities," Cahiers de recherche 02-2012, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  3. Lund, Diderik, 2009. "Rent Taxation for Nonrenewable Resources," Memorandum 01/2009, Oslo University, Department of Economics.
  4. Hart, Rob & Spiro, Daniel, 2011. "The elephant in Hotelling's room," Energy Policy, Elsevier, vol. 39(12), pages 7834-7838.
  5. Arora, Vipin & Tanner, Matthew, 2011. "How important are real interest rates for oil prices?," MPRA Paper 35883, University Library of Munich, Germany.
  6. John T. Cuddington & Grant N�lle, 2013. "Variable Long-Term Trends in Mineral Prices: The Ongoing Tug-of-War between Exploration, Depletion, and Technological Change," Working Papers 2013-02, Colorado School of Mines, Division of Economics and Business.
  7. Beatrix Gaitan & Terry Roe, 2012. "International Trade, Exhaustible-Resource Abundance and Economic Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 72-93, January.
  8. Caputo, Michael R., 2011. "A nearly complete test of a capital accumulating, vertically integrated, nonrenewable resource extracting theory of a competitive firm," Resource and Energy Economics, Elsevier, vol. 33(3), pages 725-744, September.
  9. Hart, Rob, 2012. "The economics of natural resources: Understanding and predicting the evolution of supply and demand," Working Paper Series 2012:01, Department Economics, Swedish University of Agricultural Sciences.
  10. Nikolaos Kourogenis & Phoebe Koundouri, . "On the Stationarity of Exhaustible Natural Resource Prices," DEOS Working Papers 1022, Athens University of Economics and Business.

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