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Comparative dynamics in a productive asset oligopoly

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  • Benchekroun, Hassan

Abstract

We build a subgame perfect Nash equilibrium of a common property productive asset oligopoly. We derive two surprising results. First, the steady state level of asset can be a decreasing function of the asset’s implicit growth rate. This phenomenon arises when the initial stock of asset is below a certain threshold. It represents a double curse for a common property productive asset where the well-known tragedy of the commons due to a lack of property rights is exacerbated by an increase in the productivity of the asset. Second, we show that a reduction in the number of firms exploiting the asset can, in the short run, result in an increase of the industry’s exploitation and a decrease of the level of the asset’s stock.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 138 (2008)
Issue (Month): 1 (January)
Pages: 237-261

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Handle: RePEc:eee:jetheo:v:138:y:2008:i:1:p:237-261

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Web page: http://www.elsevier.com/locate/inca/622869

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Cited by:
  1. Kenji Fujiwara, 2010. "Losses from competition in a dynamic game model of a renewable resource oligopoly," Discussion Paper Series 51, School of Economics, Kwansei Gakuin University, revised Apr 2010.
  2. Luca Lambertini & Andrea Mantovani, 2013. "Feedback Equilibria in a Dynamic Renewable Resource Oligopoly: Pre-Emption, Voracity and Exhaustion," Working Paper Series 56_13, The Rimini Centre for Economic Analysis.
  3. Colombo, Luca & Labrecciosa, Paola, 2013. "On the convergence to the Cournot equilibrium in a productive asset oligopoly," Journal of Mathematical Economics, Elsevier, vol. 49(6), pages 441-445.
  4. Dina Tasneem & Jim Engle-Warnick & Hassan Benchekroun, 2014. "An Experimental Study of a Common Property Renewable Resource Game in Continuous Time," CIRANO Working Papers 2014s-09, CIRANO.
  5. Fujiwara, Kenji, 2008. "Duopoly can be more anti-competitive than monopoly," Economics Letters, Elsevier, vol. 101(3), pages 217-219, December.
  6. Colombo, Luca & Labrecciosa, Paola, 2013. "Oligopoly exploitation of a private property productive asset," Journal of Economic Dynamics and Control, Elsevier, vol. 37(4), pages 838-853.
  7. 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.

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