Bubbles in Prices of Exhaustible Resources

Boyan Jovanovic ()

No 13320, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Aside from the equilibrium that Hotelling (1931) displayed, his model of non-renewable resources also contains a continuum of bubble equilibria. In all the equilibria the price of the resource rises at the rate of interest. In a bubble equilibrium, however, the consumption of the resource peters out, and a positive fraction of the original stock continues to trade forever. And that may well be happening in the market for high-end Bordeaux wines.

JEL-codes: E44 G12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-mac
Date: 2007-08
Note: PR EEE
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Related works:
Working Paper: BUBBLES IN PRICES OF EXHAUSTIBLE RESOURCES (2008)
Working Paper: Bubbles in Prices of Exhaustible Resources (2007)
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