Hotelling's exhaustible resource extraction model as a linear program

John M. Hartwick

We translate Hotelling's continuous-time, exhaustible resource extraction Model of 1931 into a linear program of present value extraction cost minimization subject to a stock endowment and period by period demand constraints. The appropriate form of the demand constraints allows for resource rent rising at the rate of interest in the dual program. A useful variant has the stock size endogenous.

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Year of publication:	7-2023
Authors:	Hartwick, John M.
Publisher:	Kingston, Ontario, Canada : Department of Economics, Queen's University
Subject:	resource extraction \| linear program \| rent and interest rate \| Theorie \| Theory \| Mathematische Optimierung \| Mathematical programming \| Ressourcenökonomik \| Resource economics \| Erschöpfbare Ressourcen \| Exhaustible resources \| Rohstoffwirtschaft \| Resources sector \| Zins \| Interest rate