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Reconciling Hotelling Resource Models with Hotelling's Accounting Method

Abstract:
In green accounting, it is seldom checked that depreciation must sum to original value. A re-examination of green accounting under this condition finds that, in a non-autonomous program, income should include capital gains. Subtle questions respecting the role and treatment of capital gains are brought to light through six models in exhaustible-resource economics. It is likely that there are sources of non-autonomy when a problem is not optimal or when there are non-priced assets—in practice, always. Accordingly, the questions raised strongly influence accounting method.

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Keywords: Green accounting, Non-autonomy, Depreciation, Income, Exhaustible resources, Resource-allocation mechanism

DOI: 10.5547/01956574.43.5.rcai

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Published in Volume 43, Number 5 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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