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Comparative dynamics in a productive asset oligopoly

  • Benchekroun, Hassan

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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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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  1. Benchekroun, Hassan, 2003. "Unilateral production restrictions in a dynamic duopoly," Journal of Economic Theory, Elsevier, vol. 111(2), pages 214-239, August.
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