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When additional resource stocks reduce welfare

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  • Benchekroun, Hassan
  • Halsema, Alex
  • Withagen, Cees

Abstract

In the dominant firm model, we show that an increase of the fringe's reserves of a nonrenewable resource may lead to a decrease in aggregate discounted social welfare. This happens when the difference between the fringe's extraction cost and the dominant firm's is positive and large enough. We also show that welfare might decrease if the fringe's marginal extraction cost decreases.

Suggested Citation

  • Benchekroun, Hassan & Halsema, Alex & Withagen, Cees, 2010. "When additional resource stocks reduce welfare," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 109-114, January.
    • Handle: RePEc:eee:jeeman:v:59:y:2010:i:1:p:109-114
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    References listed on IDEAS

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    1. Benchekroun, Hassan & Halsema, Alex & Withagen, Cees, 2009. "On nonrenewable resource oligopolies: The asymmetric case," Journal of Economic Dynamics and Control, Elsevier, vol. 33(11), pages 1867-1879, November.
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    5. Groot, Fons & Withagen, Cees & de Zeeuw, Aart, 2003. "Strong time-consistency in the cartel-versus-fringe model," Journal of Economic Dynamics and Control, Elsevier, vol. 28(2), pages 287-306, November.
    6. Gérard Gaudet & Pierre Lasserre, 2011. "The Efficient Use Of Multiple Sources Of A Nonrenewable Resource Under Supply Cost Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 245-258, February.
    7. Kemp, Murray C & Long, Ngo Van, 1980. "On Two Folk Theorems Concerning the Extraction of Exhaustible Resources," Econometrica, Econometric Society, vol. 48(3), pages 663-673, April.
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    Cited by:

    1. Weichenrieder, Alfons, 2017. "Should the Global Community Welcome or Mourn New Oil Discoveries?," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168089, Verein für Socialpolitik / German Economic Association.
    2. Van Long, Ngo & McWhinnie, Stephanie F., 2012. "The tragedy of the commons in a fishery when relative performance matters," Ecological Economics, Elsevier, vol. 81(C), pages 140-154.
    3. Benchekroun, Hassan & van der Meijden, Gerard & Withagen, Cees, 2020. "OPEC, unconventional oil and climate change - On the importance of the order of extraction," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    4. Debia, Sébastien & Pineau, Pierre-Olivier & Siddiqui, Afzal S., 2019. "Strategic use of storage: The impact of carbon policy, resource availability, and technology efficiency on a renewable-thermal power system," Energy Economics, Elsevier, vol. 80(C), pages 100-122.
    5. Mark Kagan & Frederick Ploeg & Cees Withagen, 2015. "Battle for Climate and Scarcity Rents: Beyond the Linear-Quadratic Case," Dynamic Games and Applications, Springer, vol. 5(4), pages 493-522, December.
    6. Gerard Meijden & Cees Withagen & Hassan Benchekroun, 2022. "An Oligopoly-Fringe Model with HARA Preferences," Dynamic Games and Applications, Springer, vol. 12(3), pages 954-976, September.
    7. Hassan Benchekroun & Miao Dai & Ngo Van Long, 2020. "On the Profitability of Cross-Ownership in Cournot Oligopolies: Stock Sizes Matter," CIRANO Working Papers 2020s-43, CIRANO.
    8. Dai, Miao & Benchekroun, Hassan & Long, Ngo Van, 2022. "On the profitability of cross-ownership in Cournot nonrenewable resource oligopolies: Stock size matters," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    9. Benchekroun, Hassan & Breton, Michèle & Chaudhuri, Amrita Ray, 2019. "Mergers in nonrenewable resource oligopolies and environmental policies," European Economic Review, Elsevier, vol. 111(C), pages 35-52.
    10. Berk, Istemi, 2015. "Two-Period Resource Duopoly with Endogenous Intertemporal Capacity Constraints," EWI Working Papers 2014-13, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    11. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
    12. van der Meijden, Gerard & Ryszka, Karolina & Withagen, Cees, 2018. "Double limit pricing," Journal of Environmental Economics and Management, Elsevier, vol. 89(C), pages 153-167.
    13. van der Meijden, Gerard & Withagen, Cees, 2020. "Monopoly, unilateral climate policies and limit pricing," Journal of Economic Dynamics and Control, Elsevier, vol. 120(C).
    14. Benchekroun, H. & Benchekroun, S., 2015. "Harvests' lifespan and North–South market share rivalry," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 114-124.
    15. Wan, Rui & Boyce, John R., 2014. "Non-renewable resource Stackelberg games," Resource and Energy Economics, Elsevier, vol. 37(C), pages 102-121.
    16. Pu-yan Nie, 2012. "A monopoly with pollution emissions," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 55(6), pages 705-711, September.
    17. Morita, Tamaki & Higashida, Keisaku & Takarada, Yasuhiro & Managi, Shunsuke, 2018. "Does acquisition of mineral resources by firms in resource-importing countries reduce resource prices?," Resources Policy, Elsevier, vol. 58(C), pages 97-110.
    18. Kollenbach, Gilbert & Schopf, Mark, 2022. "Unilaterally optimal climate policy and the green paradox," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    19. Benchekroun, Hassan & van der Meijden, Gerard & Withagen, Cees, 2019. "An oligopoly-fringe non-renewable resource game in the presence of a renewable substitute," Journal of Economic Dynamics and Control, Elsevier, vol. 105(C), pages 1-20.
    20. Shule Li & Jingjing Yan & Qiuming Pei & Jinghua Sha & Siyu Mou & Yong Xiao, 2019. "Risk Identification and Evaluation of the Long-term Supply of Manganese Mines in China Based on the VW-BGR Method," Sustainability, MDPI, vol. 11(9), pages 1-23, May.
    21. Ngo Long, 2015. "Dynamic Games Between Firms and Infinitely Lived Consumers: A Review of the Literature," Dynamic Games and Applications, Springer, vol. 5(4), pages 467-492, December.
    22. Sylwia Bialek & Alfons J. Weichenrieder, 2022. "Should the global community welcome new oil discoveries?," Journal of Economics, Springer, vol. 137(3), pages 255-278, December.

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