Mineral depletion with cost as the extraction limit: A model applied to the behavior of prices in the nickel industry

Abstract This article follows papers by Pindyck and Heal and Barrow in applying a Hotelling-type depletion model to a particular resource industry: in this case that of nickel. By means of the model the resource rent per ton of nickel is calculated as the proper index of extractive resource scarcity. The time path of this resource rent indicates that the model explains industry behavior well and that, as in the two previous studies, depletion has been an important determinant of prices and rents in this industry.

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