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2011

The elephant in Hotelling's room

Hart, Robert; Spiro, Daniel

Abstract

This paper questions the assumption, commonly used in theoretical and policy research, that scarcity rents make up a large proportion of market prices for oil and coal. We show that the empirical literature, simple calculations of historical and future scarcity rent shares, and possible theoretical explanations all imply the same overall conclusions: that scarcity rents seem to have been marginal or non-existent historically; that they almost certainly do not dominate fossil resource prices today; and that there will be other factors shaping the prices in the upcoming decades. We therefore argue that using the scarcity rent as the main or only basis for policy or for explaining empirical outcomes is ill-advised. (C) 2011 Elsevier Ltd. All rights reserved.

Keywords

Resource scarcity; Climate policy; Green paradox

Published in

Energy Policy
2011, Volume: 39, number: 12, pages: 7834-7838
Publisher: ELSEVIER SCI LTD

    UKÄ Subject classification

    Economics

    Publication identifier

    DOI: https://doi.org/10.1016/j.enpol.2011.09.029

    Permanent link to this page (URI)

    https://res.slu.se/id/publ/41810