Question

How does hotelling's theory apply to politics? Do you agree with this application? Why or why not?

Answer 1

A theory proposed by Harold Hotelling states  that owners of nonrenewable resources will only produce that resource if it wills the yield will have more value than other financial instruments available in the market, such as interest bearing securities and bonds. This assumes such owners are only motivated by profit and that markets are efficient. The theory is used by economists to predict the price of nonrenewable resources like oil, based on prevailing interest rates.  

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