Information about Hotelling Rent
- Not to be confused with Hotelling's law.
Hotelling's rule is defining the net price path as a function of time while maximising rent in the time of fully extracting a non-renewable natural resource. The maximum rent is also known as Hotelling rent or scarcity rent and is the maximum rent that could be obtained while emptying the stock resource.
Hotelling's rule is the result of analysis of non-renewable resource management by Harold Hotelling, published in the Journal of Political Economy in 1931. A similar result was published by L. C. Gray in 1914, considering the case of a single mine owner. Hotelling's result shows that in an efficient exploitation of a non-renewable and non-augmentable resource, the percentage change in net-price per unit of time should equal the discount rate in order to maximise the present value of the resource capital over the extraction period.
The simple rule can be expressed by the equilibrium situation representing the optimal solution.
,
is the discount rate.
The economic rent obtained is an abnormal rent, often referred to as resource rent, since it generates from a situation where the resource owner has open access to the resource for free. The resource rent therefore equals the shadow value of the natural resource or natural capital.
The concept of Resource rent also includes biological and other renewable resources.
References
S. Devarajan and A. C. Fisher, (1981). Hotelling's "Economics of Exhaustible Resources": Fifty Years Later. Journal of Economic Literature, Vol. 19(1):65-73.
L. C. Gray, (1914). Rent under the Assumption of Exhaustibility. Quart. J. Econ., Vol 28:466-489.
H. Hotelling, (1931). The Economics of Exhaustible Resources. J. Polit. Econ., Vol. 39:137-175.
L. C. Gray, (1914). Rent under the Assumption of Exhaustibility. Quart. J. Econ., Vol 28:466-489.
H. Hotelling, (1931). The Economics of Exhaustible Resources. J. Polit. Econ., Vol. 39:137-175.
See also
- Not to be confused with Hotelling's rule.
Hotelling's law is an observation in economics that in many markets it is rational for producers to make their products as similar as possible.
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non-renewable resource is a natural resource that cannot be re-made, re-grown or regenerated on a scale comparative to its consumption. It exists in a fixed amount that is being renewed or is used up faster than it can be made by nature.
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This article is about Economic rent as it pertains to political economy and socioeconomic theory. For other uses, see Rent.
Economic rent
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For the New Zealand law, see .
In organizational studies, resource management is the efficient and effective deployment of an organization's resources when they are needed.
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Harold Hotelling (Fulda, Minnesota, september 29, 1895 - december 26, 1973) was a mathematical statistician, and very influential economic theorist. His name is known to all statisticians because of Hotelling's T-square distribution and its use in statistical hypothesis testing and
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19th century - 20th century - 21st century
1900s 1910s 1920s - 1930s - 1940s 1950s 1960s
1928 1929 1930 - 1931 - 1932 1933 1934
Year 1931 (MCMXXXI
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1900s 1910s 1920s - 1930s - 1940s 1950s 1960s
1928 1929 1930 - 1931 - 1932 1933 1934
Year 1931 (MCMXXXI
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19th century - 20th century - 21st century
1880s 1890s 1900s - 1910s - 1920s 1930s 1940s
1911 1912 1913 - 1914 - 1915 1916 1917
Year 1914 (MCMXIV
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1880s 1890s 1900s - 1910s - 1920s 1930s 1940s
1911 1912 1913 - 1914 - 1915 1916 1917
Year 1914 (MCMXIV
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discount rate is a financial concept based on the future cash flow in lieu of the present value of the cash flow. The divisor in the discount rate formula is the resultant future value, including income.
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For the television series, see Profit (TV series)
Profit generally is the making of gain in business activity for the benefit of the owners of the business...... Click the link for more information.
This article is about Economic rent as it pertains to political economy and socioeconomic theory. For other uses, see Rent.
Economic rent
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In economics supernormal profit, also called economic rent, abnormal profit or pure profit or excess profits, is a profit exceeding the normal profit.
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See also:
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- Hotelling's rule
References
1. ^ Scherzer, J. and Sinner, Jim, Resource Rent: Have you paid any lately? Ecologic Research Report No.8, December 2006, available at www.ecologic.org.nz
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Loosely, the shadow price is the change in the objective value of the optimal solution of an optimization problem obtained by relaxing the constraint by one unit. In a business application, a shadow price is the maximum price that management is willing to pay for an extra unit of a
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Natural capital, as described in the book Natural Capitalism, is a metaphor for the mineral, plant, and animal formations of the Earth's biosphere when viewed as a means of production of oxygen, water filter, erosion preventer, or provider of other ecosystem services.
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Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation.
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This article is about Economic rent as it pertains to political economy and socioeconomic theory. For other uses, see Rent.
Economic rent
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Ricardian equivalence, (also known as Barro-Ricardo equivalence proposition or Ricardian rent), is an economic theory which suggests that government budget deficits do not affect the total level of demand in an economy.
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Johann Heinrich von Thünen (24 June 1783 - 22 September 1850) "ranks alongside Marx as the greatest economist of the nineteenth century" (Fernand Braudel). Von Thünen was a Mecklenburg (north German) landowner, who in the first volume of his treatise, The Isolated State
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In resource economics, Hartwick's Rule defines the amount of investment in produced capital (buildings, roads, knowledge stocks, etc.) that is needed to exactly offset declining stocks of non-renewable resources.
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