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Resource Mobility and Market Performance

Author

Listed:
  • Luca Colombo

    (Rennes SB - Rennes School of Business)

  • Paola Labrecciosa

    (ESSCA - ESSCA – École supérieure des sciences commerciales d'Angers = ESSCA Business School)

Abstract

We derive a feedback equilibrium of an infinite-horizon dynamic Cournot game where production requires exploitation of a renewable mobile resource, such as migratory fish, wildlife, and groundwater. We study how a small increase in the resource mobility parameter (starting from a position of no resource mobility) impacts on the equilibrium and the associated consumer's surplus, firms' profits and social welfare. We show that consumer's surplus and social welfare increase in the short run but decrease in the long run, while firms' profits may either increase or decrease in the short run, depending on initial conditions, and increase in the long run. Over the entire planning horizon, both the discounted consumer's surplus and the discounted social welfare decrease, whereas the discounted profits increase. This result remains valid also in the presence of a per unit tax on extractio

Suggested Citation

  • Luca Colombo & Paola Labrecciosa, 2023. "Resource Mobility and Market Performance," Post-Print hal-04500068, HAL.
    • Handle: RePEc:hal:journl:hal-04500068
    DOI: 10.1007/s13235-023-00517-8
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    Cited by:

    1. is not listed on IDEAS
    2. Hassan Benchekroun & Gerhard Sorger, 2024. "Preface: Special issue of Dynamic Games and Applications in Memory of Professor Ngo Van Long," Dynamic Games and Applications, Springer, vol. 14(1), pages 1-6, March.

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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