Bubbles in prices of exhaustible resources
By: Boyan Jovanovic.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- no. 13320.; Working paper series (National Bureau of Economic Research) -- working paper no. 13320.
Publisher: National Bureau of Economic Research
Published: 2007
Place of publication: Cambridge, Mass
Language: eng
Number of pages: 30
Subjects: Consumer goods -- Prices -- Mathematical models; Consumption (Economics); Equilibrium (Economics)
Description: Aside from the equilibrium that Hotelling (1931) displayed, his model of non-renewable resources also contains a continuum of bubble equilibria. In all the equilibria the price of the resource rises at the rate of interest. In a bubble equilibrium, however, the consumption of the resource peters out, and a positive fraction of the original stock continues to trade forever. And that may well be happening in the market for high-end Bordeaux wines.
Notes: "August 2007"

Includes bibliographical references (p. 20-21).

Also available in PDF from the NBER world wide web site (www.nber.org).