On oligopolistic markets for nonrenewable natural resources
Noncooperative oligopoly behavior in nonrenewable resource markets is analyzed under stationary conditions assuming perfect information. The existence of Cournot-Nash equilibria in output paths is established under standard cost and demand assumptions, and a number of comparative dynamic results are obtained. If all suppliers have the same costs, for instance, and total reserves are fixed, either increasing the number of suppliers or equalizing their reserve holdings causes more rapid resource use. If suppliers' costs differ, it is shown that equilibrium involves inefficient production; high-cost reserves may even be exhausted before low-cost reserves.
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|Date of creation:||1979|
|Date of revision:|
|Contact details of provider:|| Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA|
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- Glenn C. Loury, 1978. "The Optimal Exploitation of an Unknown Reserve," Review of Economic Studies, Oxford University Press, vol. 45(3), pages 621-636.
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CORE Discussion Papers RP
260, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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