Nonrenewable resources, strategic behavior and the hotelling rule: An experiment

Roel van Veldhuizen and Joep Sonnemans ()

Discussion Papers, Research Unit: Market Behavior from WZB Berlin Social Science Center

Abstract: This study uses the methods of experimental economics to investigate possible reasons for the lack of empirical support for the Hotelling rule for nonrenewable resources. We argue that as long as resource stocks are large 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 large stocks indeed pay significantly less attention to variables related to dynamic optimization, and overproduce relative to the Hotelling rule.

Keywords: laboratory experiment; nonrenewable resources; Hotelling rule; dynamic oligopoly (search for similar items in EconPapers)
JEL-codes: C90 L13 Q30 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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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 (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmbh:spii2014203

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