ABSTRACT
Modern contributions to the economics of exhaustible natural resources, such as oil or coal, generally start from one form or another of the famous ‘Hotelling Rule’, first put forward by Harold Hotelling (1931). The Hotelling rule is an application of the concept of a competitive (uniform) rate profits to all processes in the economy, whether these are conservation or production processes. In the classical economists this rule is not yet to be found. Does this mean that their analyses are of necessity defective, incomplete or inferior? Or does it only mean that their argument relates to a world characterized by conditions that are different from those contemplated by the Hotelling Rule? Or is the rule implicit in their analyses and what is missing is only an explicit reference to royalties as something different from profits?
