We study the effect that neighboring parties have on the economic rents from owingthe rights to a natural resource. Our application uses winning bid prices from state timberauctions in three western states. We model and show how differing nearby neighbors increasethe costs and risks associated...

The paper tests Hotelling's prediction that scarcity rent for a nonrenewable 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 nonrenewable. In contrast to previous studies, for this resource a...