Since Hotelling's seminal paper on the optimal depletion of exhaustible resources, much has been published; yet confusion remains about whether scarcity rent and price increase or decrease as a resource is depleted when costs tend to rise with depletion. We show that Hotelling's fundamental...

The model of a mineral industry developed by R. Boadway, N. Bruce, K. McKenzie, and J. Mintz (1987) is extended in two directions. First, it is modified to incorporate explicitly nonrenewability of the resource and is shown to collapse to the case examined by Boadway, Bruce, McKenzie, and Mintz...

Previous estimates of the finding costs for oil and natural gas reserves have been impeded by the joint-cost problem in exp loration. The solutions have been to either estimate the finding cost for an oil-gas aggregate or to allocate total finding costs between oil discoveries and gas...

The paper tests Hotelling's prediction that scarcity rent for a non-renewable resource will rise at the rate of discount in a market equilibrium. We perform the test using data for old-growth timber, a resource that is effectively non-renewable. In contrast to previous studies, for this resource...