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Duopoly in Exhaustible Resource Exploration and Extraction

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  • Hartwick, John M.
  • Sadorsky, Perry

Abstract

Strategic considerations of exploration and extraction are investigated in a two player, two period, two stage perfect equilibrium framework. Relative to two "plant" monopoly, the duopolists explore more and extract more period by period. A mixed game in which there is co-operation "upstream" in exploration and Cournot competition "downstream" in quantities extracted is investigated. We also note that increasing returns to scale in exploration can introduce an unstable interior solution with a corner solution the presumed stable equilibrium.

Suggested Citation

  • Hartwick, John M. & Sadorsky, Perry, 1988. "Duopoly in Exhaustible Resource Exploration and Extraction," Queen's Institute for Economic Research Discussion Papers 275214, Queen's University - Department of Economics.
    • Handle: RePEc:ags:queddp:275214
    DOI: 10.22004/ag.econ.275214
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    References listed on IDEAS

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    1. Arrow, Kenneth J. & Chang, Sheldon, 1982. "Optimal pricing, use, and exploration of uncertain natural resource stocks," Journal of Environmental Economics and Management, Elsevier, vol. 9(1), pages 1-10, March.
    2. Pindyck, Robert S, 1980. "Uncertainty and Exhaustible Resource Markets," Journal of Political Economy, University of Chicago Press, vol. 88(6), pages 1203-1225, December.
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    Cited by:

    1. Vicknair, David & Tansey, Michael & O'Brien, Thomas E., 2022. "Measuring fossil fuel reserves: A simulation and review of the U.S. Securities and Exchange Commission approach," Resources Policy, Elsevier, vol. 79(C).

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