Adjusting Prices for Volume: a test of the Hotelling valuation principle
This 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.
|Date of creation:||01 Aug 1988|
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- Geoffrey Heal & Michael Barrow, 1980. "The Relationship between Interest Rates and Metal Price Movements," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 161-181.
- Miller, Merton H & Upton, Charles W, 1985. "A Test of the Hotelling Valuation Principle," Journal of Political Economy, University of Chicago Press, vol. 93(1), pages 1-25, February.
- Peter Berck & Thomas Bible, 1985. "Wood products futures markets and the reservation price of timber," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 5(3), pages 311-316, 09.
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