5 0 obj<>/Font<>>> endobj Key Words Exhaustible resources, Hotelling model, Optimal extraction, Em-pirical tests, Oil and gas, Non-fuel minerals Abstract We review the empirical literature that extends and tests the Hotelling (1931) model of the optimal depletion of an exhaustible resource. The Hotelling rule for prices of exhaustible resources. The model described in this section is a simple version of a pioneering model of an exhaustible resource industry developed by Harold Hotelling. Hotelling’s theory is used by economists to predict the price of an exhaustible resource based on prevailing interest rates. Another ten years are added to the Hotelling time line by Livernois (2009). The theory is briefly described to set the endobj Hotelling's rule defines the net price path as a function of time while maximizing economic rent in the time of fully extracting a non-renewable natural resource. endobj 4 0 obj <>stream The theory assumes that events take place in … endobj In this episode, Michael Whalen is joined by BRG Director Roberto Cunha to discuss the fundamentals of the Hotelling rule and how this long-standing rule has prevailed in today's economy. In its simplest form the rule states that in equilibrium the net price, the price net of marginal costs and marginal taxes, rises at the rate of interest. 6 0 obj <>stream (Apr., 1931), pp. %PDF-1.4 In this paper … !r@80Q. Hotelling's Rule in the limit: an agent-based exploration of the model space David S. Dixon April 23, 2012 Hotelling's Rule is the observation that the exploitation of a … That's Hotelling Rule in its simplest form. Access supplemental materials and multimedia. Hotelling's rule defines the net price path as a function of time while maximizing economic rent in the time of fully extracting a non-renewable natural resource.The maximum rent is also known as Hotelling rent or scarcity rent and is the maximum rent that could be obtained while emptying the stock resource. Review of Economics and Statistics 92 (2), Oil is an exhaustible resource. For the purposes of this paper, there are two main themes of interest in the Hotelling's Rule literature: theoretical eorts to broaden the scope of Hotelling's Rule, and econometric eorts to nd evidence of the Hotelling's Rule … we reformulate Hotelling’s (1931) classic model of exhaustible resource extraction as a drilling problem: rms choose when to drill, but production from existing wells is constrained by reservoir pressure, which decays as oil is extracted. 66(4), pages 655-661, September. resource scarcity, should grow at the rate of interest [8]. Hotelling's Rule Under UncertaintyThe basic Hotelling model assumes that the stocks of the exhaustible resources are known with certainty. endstream The maximum rent is also known as Hotelling rent or scarcity rent and is the maximum rent … in the mine through the equation. 39, No. The economics of exhaustible resources is expressed through Hotelling′s rule. renewable resources in his quite famous article “The Economics of Exhaustible Resources”. This equilibrium law is in the literature commonly referred to as the Hotelling rule. ©2000-2021 ITHAKA. Key Words Exhaustible resources, Hotelling model, Optimal extraction, Em-pirical tests, Oil and gas, Non-fuel minerals Abstract We review the empirical literature that extends and tests the Hotelling (1931) model of the optimal depletion of an exhaustible resource. 8 0 obj<> 3 0 obj<> The economics of exhaustible resources is expressed through Hotelling’s rule. According to him, under optimal conditions, the price of an exhaustible resource, the net of extraction costs must be rising at a rate equal to the rate of interest on other assets. In this episode, Michael Whalen is joined by BRG Director Roberto Cunha to discuss the fundamentals of the Hotelling rule and how this long-standing rule has prevailed in today's economy. The time of exhaustion T is related to the amount originally. %���� The simplest version of Hotelling’s theory—more sophisticated versions will be discussed below—suggests that exhaustible resource prices should grow at the real … The historical events described above laid the foundation to why Harold Hotelling, in 1931 presented a theory regarding exhaustible resources. The most influential approach to modeling intertem poral depletion of exhaustible resources is generally at tributed to Hotelling (1931). The Economics of Exhaustible Resources Harold Hotelling The Journal of Political Economy, Vol. For a non-renewable, exhaustible resource with completely known stock, no discoveries possible, no alternatives, no recycling, private ownership and constant costs of extraction, the price of the resource will increase at the interest rate over time. All are professionals or graduate-level students dedicated to economics research and teaching. ;n58Ac=+R-I]3hNOg!4%BYgp'r)B[_e>]B1'T'WF-PHnJ&G=b\_EN%h2J_KWZgF7QP]';^7XcHmXE.j=OX5Q:e)SDa~> The rule is derived from the work of U.S. economist Harold Hotelling in his paper “The Economics of Exhaustible Resources” (Hotelling 1931), published in the Journal of Political Economy. JSTOR®, the JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA. endstream Hotelling rule was developed by Harold in the article Economics of Exhaustible Resources. On the Theory of Exhaustible Resources: Ricardo vs. Hotelling* By Heinz D. Kurz and Neri Salvadori1 1. 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