Social Welfare in a Common Property Oligopoly
Output in a Markov Nash-Cournot equilibrium to a noncooperative differential game in which m oligopolists extract a common property nonrenewable resource is bounded by the output of m-firm and (m - 1)-firm static oligopolies. The author discusses the welfare effects of the number of firms and of the divergence between private and social discount rates. He compares extraction under the Markov and open-loop equilibria and then offers an explanation for the possibility that the resource is exhausted instantaneously in a continuous time game. This explanation does not depend on the fact that the period of commitment is infinitesimal. Copyright 1992 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Volume (Year): 33 (1992)
Issue (Month): 2 (May)
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- Mohr, Ernst U, 1988. "Appropriation of Common Access Natural Resources through Exploration: The Relevance of the Open-Loop Concept," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(2), pages 307-19, May.
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- Van Der Ploeg, F., 1987. "Inefficiency of credible strategies in oligopolistic resource markets with uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 11(1), pages 123-145, March.
- Reinganum, Jennifer F & Stokey, Nancy L, 1985. "Oligopoly Extraction of a Common Property Natural Resource: The Importance of the Period of Commitment in Dynamic Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 161-73, February.
- Eswaran, Mukesh & Lewis, Tracy R, 1984. "Appropriability and the Extraction of a Common Property Resource," Economica, London School of Economics and Political Science, vol. 51(204), pages 393-400, November.
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