Nonrenewable Resources, Strategic Behavior and the Hotelling Rule : An Experiment
van Veldhuizen, Roel LU
and Sonnemans, Joep
(2018)
In Journal of Industrial Economics
66(2).
p.481-516
- Abstract
We use a laboratory experiment to investigate a novel reason for the lack of empirical support for the Hotelling rule for nonrenewable resources. Specifically, we test whether producers with large resource stocks focus less on the dynamic component of their extraction decision, making them shift extraction to the present and focus more on strategic behavior. Exploiting exogenous variation in stock size in a nonrenewable resource duopoly laboratory experiment, we find that producers with large stocks indeed pay significantly less attention to dynamic optimization, and shift extraction to the present, leading them to overproduce relative to the Hotelling rule.
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/168100fb-2057-464f-8bb8-982deb3dfbd7
- author
- van Veldhuizen, Roel
LU
and Sonnemans, Joep
- publishing date
- 2018-06-01
- type
- Contribution to journal
- publication status
- published
- subject
- in
- Journal of Industrial Economics
- volume
- 66
- issue
- 2
- pages
- 36 pages
- publisher
- Wiley-Blackwell
- external identifiers
-
- scopus:85055629889
- ISSN
- 0022-1821
- DOI
- 10.1111/joie.12173
- language
- English
- LU publication?
- no
- id
- 168100fb-2057-464f-8bb8-982deb3dfbd7
- date added to LUP
- 2019-04-08 14:36:00
- date last changed
- 2025-04-04 14:49:57
@article{168100fb-2057-464f-8bb8-982deb3dfbd7,
abstract = {{<p>We use a laboratory experiment to investigate a novel reason for the lack of empirical support for the Hotelling rule for nonrenewable resources. Specifically, we test whether producers with large resource stocks focus less on the dynamic component of their extraction decision, making them shift extraction to the present and focus more on strategic behavior. Exploiting exogenous variation in stock size in a nonrenewable resource duopoly laboratory experiment, we find that producers with large stocks indeed pay significantly less attention to dynamic optimization, and shift extraction to the present, leading them to overproduce relative to the Hotelling rule.</p>}},
author = {{van Veldhuizen, Roel and Sonnemans, Joep}},
issn = {{0022-1821}},
language = {{eng}},
month = {{06}},
number = {{2}},
pages = {{481--516}},
publisher = {{Wiley-Blackwell}},
series = {{Journal of Industrial Economics}},
title = {{Nonrenewable Resources, Strategic Behavior and the Hotelling Rule : An Experiment}},
url = {{http://dx.doi.org/10.1111/joie.12173}},
doi = {{10.1111/joie.12173}},
volume = {{66}},
year = {{2018}},
}