Thursday, January 25, 2007

False Signals of Declining Scarcity

This article (digg)
says that for certain types of finite resources (where there is uncertainty in the remaining amount), the market can result in a low price for the resource until at some point, there is a correction leading to a price spike. Is this the case for oil today? Is this theory accepted in academic economics?

Here is a related post:
But it seems to say that the decrease is due to cyclical factors (high price => more wells => high supply => low price => ... ), which is different than the above article.

No comments: