Adjusting Prices for Volume: a test of the Hotelling valuation principle
AbstractThis paper tests the hypothesis that the net of extraction cost price of a natural resource does not change with volume. The hypothesis is shown to he a consequence of Hotelling's theory. The tests are performed on equations estimated by a nonparametric regression (ACE), and we show that the usual least squares estimation techniques are not general enough to successfully perform the test. The test rejects the pure form of the Hotelling theory and shows that it is necessary to adjust sale prices for volume sold.
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Bibliographic InfoPaper provided by Department of Agricultural & Resource Economics, UC Berkeley in its series Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series with number qt4g53g5sz.
Date of creation: 01 Aug 1988
Date of revision:
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natural resources; prices; regression analysis;
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