Hotelling's Theory

This theory proposes that owners of non-renewable resources will only produce a supply of their product if it will yield more than instruments available to them in the markets - specifically bonds and other interest-bearing securities. This theory assumes that markets are efficient and that the owners of the non-renewable resources are motivated by profit. Hotelling's theory is used by economists to attempt to predict the price of oil and other nonrenewable resources, based on prevailing interest rates.

The theory states that if oil prices do not rise at the prevailing interest rate, there would be no restrictions on supply. If, conversely, oil prices were expected to increase faster than interest rates, producers would be better off not bringing the oil out of the ground.


Investment dictionary. . 2012.

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  • Hotelling's lemma — is a result in microeconomics that relates the supply of a good to the profit of the good s producer. It was first shown by Harold Hotelling, and is widely used in the theory of the firm. The lemma is very simple, and can be stated: Let y(p) be a …   Wikipedia

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  • Hotelling — Harold, 1895–1973, amerikanischer Mathematiker, theoretischer Statistiker und Ökonom. Er lehrte an der Columbia University, New York, USA und an der University of North Carolina, USA. H. gilt sowohl im Bereich der mathematischen Statistik als… …   Lexikon der Economics

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  • Harold Hotelling — (* 29. September 1895 in Fulda, Minnesota; † 26. Dezember 1973) war ein US amerikanischer Statistiker und Volkswirt. Hotelling verbrachte den größten Teil seiner Kindheit in Seattle. Nach dem Bachelor in Journalismus im Jahr 1919 beendete er 1921 …   Deutsch Wikipedia

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