IDEAS home Printed from https://ideas.repec.org/p/ris/ewikln/2015_001.html
   My bibliography  Save this paper

A Test of the Theory of Nonrenewable Resources - Controlling for Exploration and Market Power

Author

Listed:
  • Malischek, Raimund

    (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

  • Tode, Christian

    () (Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI))

Abstract

Despite the central role of the Hotelling model within the theory of nonrenewable resources, tests of the model are rarely found. If existent, these tests tend to ignore two key features, namely market power and exploration. We therefore suggest an extension of the basic Hotelling framework to incorporate exploration activity and market power and propose an implicit price behavior test of the model to indicate whether firms undergo inter-temporal optimization. When applied to a newly constructed data set for the uranium mining industry, the null hypothesis of the firm optimizing inter-temporally is rejected in all settings. However, parameter estimates of the model still yield valuable information on cost structure, resource scarcity and market power. Our results suggest that the shadow price of the resource in situ is comparably small and may be overshadowed by market power, which may serve as an explanation for the firm failing to optimize inter-temporally.

Suggested Citation

  • Malischek, Raimund & Tode, Christian, 2015. "A Test of the Theory of Nonrenewable Resources - Controlling for Exploration and Market Power," EWI Working Papers 2015-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
  • Handle: RePEc:ris:ewikln:2015_001
    as

    Download full text from publisher

    File URL: https://www.ewi.uni-koeln.de/cms/wp-content/uploads/2015/12/EWI_WP_15_01_Test_Theory_Nonrenewable_Resources.pdf
    File Function: Full text
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Roman Mendelevitch & Thanh Thien Dang, 2016. "Nuclear Power and the Uranium Market: Are Reserves and Resources Sufficient?," DIW Roundup: Politik im Fokus 98, DIW Berlin, German Institute for Economic Research.

    More about this item

    Keywords

    hotelling rule; resource economics; resource scarcity; dynamic optimization; exploration; market power; Hausman Test;

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ewikln:2015_001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Williams). General contact details of provider: http://edirc.repec.org/data/ewikode.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.