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On the impact of cross-ownership in a common property renewable resource oligopoly

Author

Listed:
  • Miao Dai

    (CEE-M - Centre d'Economie de l'Environnement - Montpellier - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - UM - Université de Montpellier)

  • Hassan Benchekroun

    (Department of Economics [Montréal] - McGill University = Université McGill [Montréal, Canada])

  • Ilyass Dahmouni

    (GERAD - Groupe d’études et de recherche en analyse des décisions - EPM - École Polytechnique de Montréal - McGill University = Université McGill [Montréal, Canada] - HEC Montréal - HEC Montréal - UQAM - Université du Québec à Montréal = University of Québec in Montréal)

Abstract

This paper examines a dynamic game of exploitation of a productive asset by agents who subsequently sell the outcomes of their endeavours in an oligopolistic market where a subset of the oligopolists owns a share in each other's profits. A Markov Perfect Nash Equilibrium of the game is constructed and used to analyze the impact of cross-ownership on the equilibrium production strategies, the steady state resource stocks, the profitability of cross-ownership, and social welfare. We show that there exists an interval of resource stocks for which a symmetric cross-ownership can be profitable, even though such rival cross-shareholdings are unprofitable in the corresponding static equilibrium framework. Moreover, we demonstrate that cross-ownership may not only lead to a higher market output and social welfare in the short run, but also a higher steady-state stock, industry production, and social welfare in the long run. Thus, antitrust authorities should be cautious in ruling in the renewable resource industries.

Suggested Citation

  • Miao Dai & Hassan Benchekroun & Ilyass Dahmouni, 2024. "On the impact of cross-ownership in a common property renewable resource oligopoly ," CEE-M Working Papers hal-04573659, CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro.
    • Handle: RePEc:hal:wpceem:hal-04573659
    Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04573659
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