ABSTRACT

This chapter focuses on Piero Sraffa's discussion of exhaustible resources in his hitherto unpublished papers and their reflection in his 1960 book. It summarizes briefly Sergio Parrinello's argument in his 1983 paper against the background of Sraffa's considerations. Parrinello argued in terms of a different model that the presence of exhaustible resources 'does not add insurmountable difficulties for the development of the classical approach itself. The chapter provides a short account of the main issues raised and competing answers given in the discussions that followed Parrinello's paper, and Parrinello's revision of his earlier view in Parrinello. It focuses on recent contributions to the issue at hand which focus attention on the explanatory power of David Ricardo's approach to exhaustible resources on the one hand and Richard Hotelling's approach on the other. The Hotelling Rule implies that the prices of resources in situ need to increase over time at a rate that is equal to the competitive rate of profits.