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A note on the theory of investment: Hotelling's rule under process independence

Author

Listed:
  • Li, Chuan-Zhong

    (Department of Economics, Uppsala University)

  • Löfgren , Karl-Gustaf

    (Department of Economics, Umeå University)

Abstract

This note shows that the welll-known Hotelling rule holds for a wider class of capital investment projects with a property of process independence. Optimality behavior is therefore not a necessary condition for deriving the result.

Suggested Citation

  • Li, Chuan-Zhong & Löfgren , Karl-Gustaf, 2008. "A note on the theory of investment: Hotelling's rule under process independence," Umeå Economic Studies 752, Umeå University, Department of Economics.
    • Handle: RePEc:hhs:umnees:0752
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    References listed on IDEAS

    as
    1. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 647-685, December.
    2. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
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    Keywords

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    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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