Env-Econ 101: Hotelling's Rule Part 2

Environmental Economics

In Part 1 of our Hotelling's Rule explanation , we laid out the basic economic observation that for a non-renewable, exhaustible resource with completely known stock, no discoveries possible, no alternatives, no recycling, private ownership and constant costs of extraction, the price of the resource will increase at the interest rate over time.  The complete stock of the resource is fully known and there is no more.

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