A note on the logical inconsistency of the Hotelling Rule: A Revisit from the System's Analysis Perspective

Nikolay Khabarov, Alexey Smirnov and Michael Obersteiner

Papers from arXiv.org

Abstract: The "Hotelling rule" (HR) called to be "the fundamental principle of the economics of exhaustible resources" has a logical deficiency which was never paid a sufficient attention to. This deficiency should be taken into account before attempting to explain discrepancies between the price prediction provided by the HR and historically observed prices. Our analysis is focused on the HR in its original form, we do not touch upon other aspects such as varying extraction costs and other ways of upgrading the original model underlying the Hotelling rule. We conclude that HR can not be derived from the simple models as it was claimed, therefore it should be understood as an assumption on its own, and not as a rule derived from other more basic assumptions.

Date: 2023-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2310.12807 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2310.12807

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().