Reading: Robert Solow (1974): The Economics of Resources or the Resources of Economics
Robert Solow (1974): The Economics of Resources or the Resources of Economics: The American Economic Review, Vol. 64, No. 2, Papers and Proceedings of the Eighty-sixth Annual Meeting of the American Economic Association. (May, 1974), pp. 1-14:
Five Questions:
- Is this a "what markets do" paper or a "what planners should do" paper?
- Solow says that hitherto prices for exhaustible resources have been falling "presumably" (a) because "extraction costs are falling through time", as opposed to alternative explanations based on (b) investor myopia, (c) insecurity of property rights, and (d) a failure of the market to properly mobilize society's risk bearing capacity. Why does Solow jump immediately for (a)--the market is doing it right--rather than for (b), (c), and (d)?
- Does the path of the price of, say, oil since 1950 conform to Solow's model and expectations? Why or why not?
- What does Solow have to say about "pure" time preference?
- Why does Solow think it most important to focus on the zero-technological-progress case?
Harold Hotelling (1931): The Economics of Exhaustible Resources Journal of Political Economy
