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A note on the theory of investment: Hotelling’s rule under process independence

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  • Chuan-Zhong Li
  • Karl-Gustaf Löfgren

Abstract

This note shows that the welll-known Hotelling rule holds for a wider class of capital investment projects with a property of process independence. Optimality behavior is therefore not a necessary condition for deriving the result.
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Suggested Citation

  • Chuan-Zhong Li & Karl-Gustaf Löfgren, 2010. "A note on the theory of investment: Hotelling’s rule under process independence," Letters in Spatial and Resource Sciences, Springer, vol. 3(2), pages 55-60, July.
  • Handle: RePEc:spr:lsprsc:v:3:y:2010:i:2:p:55-60
    DOI: 10.1007/s12076-010-0035-7
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    References listed on IDEAS

    as
    1. Kenneth Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "Evaluating Projects and Assessing Sustainable Development in Imperfect Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(4), pages 647-685, December.
    2. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
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    More about this item

    Keywords

    Hotelling’s rule; Capital pricing; Dynamic welfare; C60; H54; Q39;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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