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A Useful Economic Law That's Always Wrong
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A Useful Economic Law That's Always Wrong

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Byrne Hobart
Apr 2, 2020
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A mostly useful but always wrong model of natural resource prices is Hotelling’s Rule, which basically states that the optimal depletion rate for a natural resource should be the one that causes price to rise annually at the producer’s discount rate. The intuition is straightforward: if you have some natural resource in the ground, you can either ge…

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