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Whither Hotelling: Tests of the Theory of Exhaustible Resources

  • 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)

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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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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