Suchergebnisse

Consider a lobby group of exhaustible-resource suppliers, which bargains with the government over the extraction of an exhaustible resource and over contribution payments. We characterize the path of contributions and the resulting extraction path, taking into account how the environmental damage of resource usage and the demand elasticity change optimal extraction. A high marginal environmental flow damage reduces the government s preferred speed of extraction, a low price elasticity of resource demand reduces that of the lobby. Moreover, the lobby s preferred total extraction exceeds that of the government whenever environmental stock damages exist. Contribution payments are usually positive and declining, along with the conflict of interest between the government and the lobby. In some cases, they may be increasing for while, possibly from a negative level, but they eventually decline and vanish in the long run.

Harold Hotelling's 1931 article on the economics of exhaustible resources is considered groundbreaking in the history of nonrenewable resource analysis. Hotelling's innovation has been characterized by comparing his work with other contributions dealing with conservation issues. It has also been connected to his earlier work on depreciation, published in 1925, for using the same kind of mathematical formalism. This article further explores this second research direction on the basis of new archival materials, showing that Hotelling conceived his contributions on resources and depreciation as closely and substantially intertwined. It also suggests that Hotelling's interest in exhaustible resources came from his earlier readings in accounting. These results shed new light on Hotelling's early economic research, on our common understanding of his 1931 contribution, and on the origins of the connection between nature and capital in the history of environmental economics.