Optimal Tariffs on Exhaustible Resources: The Case of a Quantity Setting Cartel
AbstractWe formulate a dynamic game model of trade in an exhaustible resource with a quantity-setting cartel. We compute the feedback Nash equilibrium and two Stackelberg equilibria under two different leadership scenarios: leadership by the strategic importing country, and leadership by the exporting cartel. We numerically show that as compared to the Nash equilibrium, both players are better off if the importing country is the leader. The follower is worse off if the exporting cartel is the leader. Among the three game-theoretic outcomes, the world welfare is highest under the importing country's leadership and lowest under the exporting country’s leadership.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3721.
Date of creation: 2012
Date of revision:
dynamic game; exhaustible resource; Stackelberg leadership; optimal tariff;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources
- Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
- F18 - International Economics - - Trade - - - Trade and Environment
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Van Long Ngo, 2010. "A Survey Of Dynamic Games In Economics:," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., volume 1, number 7577.
- Santiago J. Rubio & Luisa Escriche, 1998.
"- Strategic Pigouvian Taxation, Stock Externalities And Polluting Non-Renewable Resources,"
Working Papers. Serie EC
1998-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Rubio, Santiago J. & Escriche, Luisa, 2001. "Strategic pigouvian taxation, stock externalities and polluting non-renewable resources," Journal of Public Economics, Elsevier, vol. 79(2), pages 297-313, February.
- Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, October.
- Kenji Fujiwara & Ngo Van Long, 2010.
"Welfare Implications of Leadership in a Resource Market Under Bilateral Monopoly,"
CIRANO Working Papers
- Kenji Fujiwara & Ngo Long, 2011. "Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly," Dynamic Games and Applications, Springer, vol. 1(4), pages 479-497, December.
- Kenji Fujiwara & Ngo Van Long, 2011. "Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly," Discussion Paper Series 76, School of Economics, Kwansei Gakuin University, revised Sep 2011.
- Wirl Franz, 1994. "Pigouvian Taxation of Energy for Flow and Stock Externalities and Strategic, Noncompetitive Energy Pricing," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 1-18, January.
- Tahvonen, Olli, 1996. "Trade with Polluting Nonrenewable Resources," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 1-17, January.
- Ngo Van Long & Gerhard Sorger, 2009. "A dynamic pricipal-agent problem as a feedback Stackelberg differentioal game," Vienna Economics Papers 0905, University of Vienna, Department of Economics.
- James L. Smith, 2009.
"World Oil: Market or Mayhem?,"
Journal of Economic Perspectives,
American Economic Association, vol. 23(3), pages 145-64, Summer.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.