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Feedback equilibria in a dynamic renewable resource oligopoly: pre-emption, voracity and exhaustion

  • Luca Lambertini

    ()

    (University of Bologna & ENCORE)

  • Andrea Mantovani

    ()

    (University of Bologna & IEB)

We extend Fujiwara’s (2008) model to describe a differential oligopoly game of resource extraction under static, linear feedback and nonlinear feedback strategies, generalising his result that steady state feedback outputs are lower than monopoly and static oligopoly equilibrium outputs for any number of firms. Additionally, we show that (i) feedback rules entail resource exhaustion for a finite number of firms; and (ii) feedback strategies are more aggressive than static ones as long as the resource stock is large enough, in accordance with the acquired view based on the traditional pre-emption argument associated with feedback information.

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2013/26.

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Length: 19 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:ieb:wpaper:2013/6/doc2013-26
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  2. Jun-ichi Itaya & Koji Shimomura, 1999. "A Dynamic Conjectural Variations Model in the Private Provision of Public Goods: a Differential Game Approach," Discussion Paper Series 104, Research Institute for Economics & Business Administration, Kobe University.
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  6. Fujiwara, Kenji, 2008. "Duopoly can be more anti-competitive than monopoly," Economics Letters, Elsevier, vol. 101(3), pages 217-219, December.
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  17. Dawid, Herbert & Kopel, Michael, 1997. "On the Economically Optimal Exploitation of a Renewable Resource: The Case of a Convex Environment and a Convex Return Function," Journal of Economic Theory, Elsevier, vol. 76(2), pages 272-297, October.
  18. Benhabib, Jess & Radner, Roy, 1992. "The Joint Exploitation of a Productive Asset: A Game-Theoretic Approach," Economic Theory, Springer, vol. 2(2), pages 155-90, April.
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  22. R. Cellini & L. Lambertini, 2000. "Feedback and Open-Loop Solutions," Working Papers 393, Dipartimento Scienze Economiche, Universita' di Bologna.
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