Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96220
Authors: 
van Veldhuizen, Roel
Sonnemans, Joep
Year of Publication: 
2014
Series/Report no.: 
WZB Discussion Paper SP II 2014-203
Abstract: 
This study uses the methods of experimental economics to investigate possible reasons for the lack of empirical support for the Hotelling rule for nonrenewable resources. We argue that as long as resource stocks are large enough, producers may choose to (partially) ignore the dynamic component of their production decision, shifting production to the present and focusing more on strategic behavior. We experimentally vary stock size in a nonrenewable resource duopoly setting and find that producers with large stocks indeed pay significantly less attention to variables related to dynamic optimization, and overproduce relative to the Hotelling rule.
Subjects: 
laboratory experiment
nonrenewable resources
Hotelling rule
dynamic oligopoly
JEL: 
C90
Q30
L13
Document Type: 
Working Paper

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