Money, Banks and Finance in Economic Thought

Depreciation and Exhaustible Resources: In Search of the Missing Link in Hotelling's Early Works

Missemer Antoine, CNRS-CIRED Paris
Gaspard Marion Gaspard, Triangle - Lyon 2
Ferreira da Cunha Roberto, IHS Markit

Harold Hotelling’s 1925 contribution to the theory of depreciation and 1931 article on exhaustible resources have sometimes been linked based on the proximity of mathematical structures. This paper establishes, from new archival material, that Hotelling conceived these two projects being intrinsically connected through the common thread of asset valuation. We also establish the reasons why he made such a rapprochement – the missing link between his two projects, by exploring his early readings, letters and reports from the 1920s, which led him to consider depreciation and exhaustible resources as requiring full economic investigations beyond existing debates on the accounting and technical literatures. This particularly sheds new light on Hotelling’s motivation for and contribution to natural resource analysis.

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Keywords: Hotelling, natural resource economics, depreciation, mathematical economics

Paper file