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Whither Hotelling: Tests of the Theory of Exhaustible Resources

Author

Listed:
  • 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.

Suggested Citation

  • Margaret E. Slade & Henry Thille, 2009. "Whither Hotelling: Tests of the Theory of Exhaustible Resources," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 239-259, September.
    • Handle: RePEc:anr:reseco:v:1:y:2009:p:239-259
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    More about this item

    Keywords

    Hotelling model; optimal extraction; empirical tests; oil and gas; nonfuel minerals;
    All these keywords.

    JEL classification:

    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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