Nonrenewable Resources, Strategic Behavior and the Hotelling Rule: An Experiment

Roel van Veldhuizen and Joep Sonnemans ()

No 11-014/1, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This study uses the methods of experimental economics to investigate possible causes for the failure of the Hotelling rule for nonrenewable resources. We argue that as long as resource stocks are high enough, producers may choose to (partially) ignore the dynamic component of their production decision, shifting production to the present and focusing more on strategic behavior. We experimentally vary stock size in a nonrenewable resource duopoly setting and find that producers with high stocks indeed pay significantly less attention to variables related to dynamic optimization, leading to a failure of the Hotelling rule.

Keywords: Experiments; Nonrenewable Resources; Dynamic Oligopoly (search for similar items in EconPapers)
JEL-codes: C90 L13 Q31 Q41 (search for similar items in EconPapers)
Date: 2011-01-21
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Nonrenewable Resources, Strategic Behavior and the Hotelling Rule: An Experiment (2018)
Working Paper: Nonrenewable resources, strategic behavior and the hotelling rule: An experiment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20110014

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