Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 752: A note on the theory of investment: Hotelling's rule under process independence

Chuan-Zhong Li () and Karl-Gustaf Löfgren ()
Additional contact information
Chuan-Zhong Li: Department of Economics, Uppsala University, Postal: Box 513, SE-751 20 Uppsala, Sweden
Karl-Gustaf Löfgren: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: This note shows that the welll-known Hotelling rule holds for a wider class of capital investment projects with a property of process independence. Optimality behavior is therefore not a necessary condition for deriving the result.

Keywords: Hotelling's rule; capital investment and process independence

JEL-codes: D10; Q20

5 pages, October 10, 2008

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Published as
Chuan-Zhong Li and Karl-Gustaf Löfgren, (2010), 'A note on the theory of investment: Hotelling's rule under process independence', Letters in Spatial and Resource Sciences

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