Bubbles in Prices of Exhaustible Resources

Boyan Jovanovic ()

No 26, 2008 Meeting Papers from Society for Economic Dynamics

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 be traded forever. And that may well be happening in the market for high-end Bordeaux wines.

Date: 2008
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Related works:
Working Paper: BUBBLES IN PRICES OF EXHAUSTIBLE RESOURCES (2008)
Working Paper: Bubbles in Prices of Exhaustible Resources (2007)
Working Paper: Bubbles in Prices of Exhaustible Resources (2007)
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