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Economic Accounting in the Simple Hotelling Model

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  • Cairns, Robert D.

Abstract

Because of its simplicity, the simple Hotelling model of exhaustible-resource extraction is a useful vehicle to address two themes in economic accounting: (1) Foundational equalities in the calculation of depreciation and in double-entry bookkeeping, or circular flow, apply in both accounting and economics. (2) Incentives, decisions and outcomes are crucial in economics. It is argued that financial accounting satisfies the demands of the first theme but not the second and that green accounting falls short on both. Both can be satisfied if capital gains are included in net income and product. Comparisons are made to studies in general economics.

Suggested Citation

  • Cairns, Robert D., 2018. "Economic Accounting in the Simple Hotelling Model," Resource and Energy Economics, Elsevier, vol. 51(C), pages 18-27.
    • Handle: RePEc:eee:resene:v:51:y:2018:i:c:p:18-27
    DOI: 10.1016/j.reseneeco.2017.10.002
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    Cited by:

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    3. Hanyi Zhao & Yixiang Tian & Xiangyun Zhou & Luping Zhang & Wei Meng, 2021. "Rating Regulatory Mechanism Effect Promotion under the Environmental Issuance Effects: Based on the Incentive Difference Hotelling Model," Sustainability, MDPI, vol. 13(10), pages 1-19, May.

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    More about this item

    Keywords

    Accounting; Exhaustible resource; Hotelling; Investment; Depreciation; Income; Capital gains;
    All these keywords.

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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