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Exploration for Nonrenewable Resources in a Dynamic Oligopoly: An Arrovian Result

  • L. Lambertini

I investigate two versions of a differential Cournot oligopoly game with nonrenewable resource exploitation, in which each firm may either exploit its own private pool or exploit a common pool jointly with the rivals. Firms use a deterministic technology to invest in exploration activities. In both models, there emerges that (i) the individual exploration effort is higher when each firms has exclusive rights on a pool of its own, and (ii) depending on the assumptions on technology and demand, the aggregate exploration effort is either constant or increasing in the number of firms.

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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp859.

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Date of creation: Jan 2013
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Handle: RePEc:bol:bodewp:wp859
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  1. Deshmukh, Sudhakar D & Pliska, Stanley R, 1980. "Optimal Consumption and Exploration of Nonrenewable Resources under Uncertainty," Econometrica, Econometric Society, vol. 48(1), pages 177-200, January.
  2. Salant, Stephen W, 1976. "Exhaustible Resources and Industrial Structure: A Nash-Cournot Approach to the World Oil Market," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 1079-93, October.
  3. Olsen, Trond E, 1988. "Strategic Considerations in Invention and Innovation; The Case of Natural Resources Revisited," Econometrica, Econometric Society, vol. 56(4), pages 841-49, July.
  4. Cellini, Roberto & Lambertini, Luca, 2007. "Time consistent fiscal policies in a Ramsey economy," Mathematical Social Sciences, Elsevier, vol. 53(3), pages 296-313, May.
  5. Colombo, Luca & Labrecciosa, Paola, 2013. "Oligopoly exploitation of a private property productive asset," Journal of Economic Dynamics and Control, Elsevier, vol. 37(4), pages 838-853.
  6. Karp, Larry & Lee, In Ho, 2000. "Time-Consistent Policies," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt94q3m5mq, Department of Agricultural & Resource Economics, UC Berkeley.
  7. Fershtman, C. & Nitzan, S., 1988. "Dynamic Voluntary Provision Of Public Goods," Papers 21-88, Tel Aviv.
  8. Stephen Polasky, 1996. "Exploration and Extraction in a Duopoly-Exhaustible Resource Market," Canadian Journal of Economics, Canadian Economics Association, vol. 29(2), pages 473-92, May.
  9. Quyen, N V, 1991. "Exhaustible Resources: A Theory of Exploration," Review of Economic Studies, Wiley Blackwell, vol. 58(4), pages 777-89, July.
  10. Loury, Glenn C, 1986. "A Theory of 'Oil'igopoly: Cournot Equilibrium in Exhaustible Resource Markets with Fixed Supplies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 285-301, June.
  11. Cairns, Robert D. & Van Quyen, Nguyen, 1998. "Optimal Exploration for and Exploitation of Heterogeneous Mineral Deposits," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 164-189, March.
  12. Davison, R, 1978. "Optimal Depletion of an Exhaustible Resource with Research and Development towards an Alternative Technology," Review of Economic Studies, Wiley Blackwell, vol. 45(2), pages 355-67, June.
  13. 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.
  14. Cellini, Roberto & Lambertini, Luca, 2002. "A differential game approach to investment in product differentiation," Journal of Economic Dynamics and Control, Elsevier, vol. 27(1), pages 51-62, November.
  15. Hoel, Michael, 1978. "Resource extraction, substitute production, and monopoly," Journal of Economic Theory, Elsevier, vol. 19(1), pages 28-37, October.
  16. Quyen, N V, 1988. "The Optimal Depletion and Exploration of a Nonrenewable Resource," Econometrica, Econometric Society, vol. 56(6), pages 1467-71, November.
  17. Boyce, John R. & Vojtassak, Lucia, 2008. "An 'oil'igopoly theory of exploration," Resource and Energy Economics, Elsevier, vol. 30(3), pages 428-454, August.
  18. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  19. 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 429-46, August.
  20. Hoel, Michael, 1983. "Monopoly resource extractions under the presence of predetermined substitute production," Journal of Economic Theory, Elsevier, vol. 30(1), pages 201-212, June.
  21. 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.
  22. Christopher Harris & John Vickers, 1995. "Innovation and Natural Resources: A Dynamic Game with Uncertainty," RAND Journal of Economics, The RAND Corporation, vol. 26(3), pages 418-430, Autumn.
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