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- Title
Hotelling's 'Economics of Exhaustible Resources': Fifty Years Later.
- Authors
Devarajan, Shantayanan; Fisher, Anthony C.
- Abstract
There are only a few fields in economics whose antecedents can be traced to a single, seminal article. One such field is natural resource economics, which is currently experiencing an explosive revival of interest; its origin is widely recognized as Harold Hotelling's 1931 paper, "The Economics of Exhaustible Resources." Although Hotelling's paper appears a half-century ago, the current wave of interest in natural resource economics is less than 10 years old. Events of the 1930's of course brought other concerns, and serious attention to problems of resource depletion had to wait for the energy and environmental. Though the basic idea is first stated non-technically, much of the article is an exercise in the calculus of variations--a mathematical tool not commonly found in economics journals until the 1950's, at the earliest. He thus showed that the competitive resource owner would deplete at a socially optimal rate. Therefore, the conservationists' pleas for public intervention cannot be based on any inherent tendency for competition to exploit a resource too rapidly, assuming no divergence between the private and social discount rates.
- Subjects
HOTELLING, Harold, 1895-1973; NATURAL resources; ECONOMICS literature; ECONOMISTS; ECONOMICS of Exhaustible Resources, The (Book); MATHEMATICAL optimization; OPERATIONS research; ECONOMIC research
- Publication
Journal of Economic Literature, 1981, Vol 19, Issue 1, p65
- ISSN
0022-0515
- Publication type
Article