A test of the Hotelling rule using old-growth timber data

John Livernois, Henry Thille and Xianqiang Zhang

Canadian Journal of Economics, 2006, vol. 39, issue 1, 163-186

Abstract: The paper tests Hotelling's prediction that scarcity rent for a non-renewable resource will rise at the rate of discount in a market equilibrium. We perform the test using data for old-growth timber, a resource that is effectively non-renewable. In contrast to previous studies, for this resource a measure of scarcity rent is directly observable in the form of stumpage price bids in timber auctions. We construct a model that allows for replanting and captures the institutional framework of the western U.S. timber market. The modified Hotelling rule that we derive is not rejected in several of our specifications.

Date: 2006
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Citations: View citations in EconPapers (13)

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Journal Article: A test of the Hotelling rule using old‐growth timber data (2006)
Working Paper: A Test of the Hotelling Rule Using Old-Growth Timber Data (2003)
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