Bubbles In Prices Of Exhaustible Resources
Aside from the equilibrium that Hotelling (1931) displayed, his model of non-renewable resources also contains a continuum of bubble equilibria. In all the equilibria the price of the resource rises at the rate of interest. In a bubble equilibrium, however, the consumption of the resource peters out, and a positive fraction of the original stock continues to be traded forever. And that may well be happening in the market for high-end Bordeaux wines.
References listed on IDEAS
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- Tirole, Jean, 1985. "Asset Bubbles and Overlapping Generations," Econometrica, Econometric Society, vol. 53(6), pages 1499-1528, November.
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85, Federal Reserve Bank of Minneapolis.
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"Auctions and the Price of Art,"
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- Stephen F. Le Roy, 2004. "Rational Exuberance," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 783-804, September.
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9304, Centro de Investigacion Economica, ITAM.
- repec:cup:cbooks:9780521297615 is not listed on IDEAS
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