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Backstop Technology for an Exhaustible Resource: A New Look at an Old Problem

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  • Fishelson, Gideon

Abstract

The about, 15 year old problem of the behavior of prices of an exhaustible resource when faced with a backstop technology is reworked for a more complete set of possible market outcomes. The market demand is assumed linear which further distinguishes between a competitive market and a monopoly. The analysis shades light from other angles on previous findings and brings up some fine points that were bypassed in previous research like the behavior when the cost of the backstop is below current price or even further lower, below the price at which the elasticity of demand is unity.

Suggested Citation

  • Fishelson, Gideon, 1992. "Backstop Technology for an Exhaustible Resource: A New Look at an Old Problem," Foerder Institute for Economic Research Working Papers 275562, Tel-Aviv University > Foerder Institute for Economic Research.
    • Handle: RePEc:ags:isfiwp:275562
    DOI: 10.22004/ag.econ.275562
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    File URL: https://ageconsearch.umn.edu/record/275562/files/TEL-AVIV-FSWP-199.pdf
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    References listed on IDEAS

    as
    1. Gilbert, Richard J. & Goldman, Steven M., 1978. "Potential competition and the monopoly price of an exhaustible resource," Journal of Economic Theory, Elsevier, vol. 17(2), pages 319-331, April.
    2. Solow, Robert M, 1974. "The Economics of Resources or the Resources of Economics," American Economic Review, American Economic Association, vol. 64(2), pages 1-14, May.
    3. Dasgupta, Partha & Gilbert, Richard & Stiglitz, Joseph, 1983. "Strategic Considerations in Invention and Innovation: The Case of Natural Resources," Econometrica, Econometric Society, vol. 51(5), pages 1439-1448, September.
    4. Nancy Gallini & Tracy Lewis & Roger Ware, 1983. "Strategic Timing and Pricing of a Substitute in a Cartelized Resource Market," Canadian Journal of Economics, Canadian Economics Association, vol. 16(3), pages 429-446, August.
    5. Hoel, Michael, 1978. "Resource extraction, substitute production, and monopoly," Journal of Economic Theory, Elsevier, vol. 19(1), pages 28-37, October.
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