On Price Taking Behavior in a Nonrenewable Resource Cartel-Fringe Game
We consider a nonrenewable resource game with one cartel and a set of fringe members. We show that (i) the outcomes of the closed-loop and the open-loop nonrenewable resource game with the fringe members as price takers (the cartel-fringe game à la Salant 1976) coincide and (ii) when the number of fringe firms becomes arbitrarily large, the equilibrium outcome of the closed-loop Nash game does not coincide with the equilibrium outcome of the closed-loop cartel-fringe game. Thus, the outcome of the cartel-fringe open-loop equilibrium can be supported as an outcome of a subgame perfect equilibrium. However the interpretation of the cartel-fringe model, where from the outset the fringe is assumed to be price-taker, as a limit case of an asymmetric oligopoly with the agents playing Nash-Cournot, does not extend to the case where firms can use closed-loop strategies.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (514) 343-6557
Fax: (514) 343-7221
Web page: http://www.cireq.umontreal.caEmail:
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Drew Fudenberg & David K. Levine, 1988. "Open and Closed-Loop Equilibria in Dynamic Games With Many Players," Levine's Working Paper Archive 221, David K. Levine.
- 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.
- R. Quentin Grafton & Tom Kompas & Ngo Van Long, 2010. "Biofuels Subsidies and the Green Paradox," CESifo Working Paper Series 2960, CESifo Group Munich.
- CHAKRAVORTY Ujjayant & MOREAUX Michel & TIDBALL Mabel, 2006.
"Ordering the Extraction of Polluting Nonrenewable Resources,"
LERNA Working Papers
06.19.212, LERNA, University of Toulouse.
- Ujjayant Chakravorty & Michel Moreaux & Mabel Tidball, 2008. "Ordering the Extraction of Polluting Nonrenewable Resources," American Economic Review, American Economic Association, vol. 98(3), pages 1128-44, June.
- Chakravorty, Ujjayant & Moreaux, Michel & Tidball, Mabel, 2006. "Ordering the Extraction of Polluting Nonrenewable Resources," IDEI Working Papers 415, Institut d'Économie Industrielle (IDEI), Toulouse.
- John Hartwick, 2006.
"The Quadratic Oil Extraction Oligopoly,"
1095, Queen's University, Department of Economics.
- repec:ner:tilbur:urn:nbn:nl:ui:12-117032 is not listed on IDEAS
- Lewis, Tracy R & Schmalensee, Richard, 1980.
"On Oligopolistic Markets for Nonrenewable Natural Resources,"
The Quarterly Journal of Economics,
MIT Press, vol. 95(3), pages 475-91, November.
- Lewis, Tracy R. & Schmalensee, Richard., 1979. "On oligopolistic markets for nonrenewable natural resources," Working papers 1052-79., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, March.
- Newbery, David M G, 1981. "Oil Prices, Cartels, and the Problem of Dynamic Inconsistency," Economic Journal, Royal Economic Society, vol. 91(363), pages 617-46, September.
- Groot, Fons & Withagen, Cees & de Zeeuw, Aart, 2003.
"Strong time-consistency in the cartel-versus-fringe model,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 28(2), pages 287-306, November.
- Groot, F. & Withagen, C.A.A.M. & de Zeeuw, A.J., 2003. "Strong time-consistency in the cartel-versus-fringe model," Other publications TiSEM 5ba46a2e-d763-4a8c-939b-3, School of Economics and Management.
- Groot, A.M. & Withagen, C.A.A.M. & de Zeeuw, A.J., 1996. "Strong Time-Consistency in the Cartel-versus-Fringe Model," Discussion Paper 1996-22, Tilburg University, Center for Economic Research.
- 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.
- Michael Hoel, 2008.
"Bush Meets Hotelling: Effects of Improved Renewable Energy Technology on Greenhouse Gas Emissions,"
CESifo Working Paper Series
2492, CESifo Group Munich.
- Michael Hoel, 2009. "Bush Meets Hotelling: Effects of Improved Renewable Energy Technology on Greenhouse Gas Emissions," Working Papers 2009.1, Fondazione Eni Enrico Mattei.
- Reinganum, Jennifer F & Stokey, Nancy L, 1985. "Oligopoly Extraction of a Common Property Natural Resource: The Importance of the Period of Commitment in Dynamic Games," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 161-73, February.
- Frederick Van der Ploeg & Cees A. Withagen, 2010.
"Is There Really a Green Paradox?,"
CESifo Working Paper Series
2963, CESifo Group Munich.
- BENCHEKROUN, Hassan & HALSEMA, Alex & WITHAGEN, Cees, 2008.
"On Nonrenewable Resource Oligopolies : The Asymmetric Case,"
Cahiers de recherche
13-2008, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Benchekroun, Hassan & Halsema, Alex & Withagen, Cees, 2009. "On nonrenewable resource oligopolies: The asymmetric case," Journal of Economic Dynamics and Control, Elsevier, vol. 33(11), pages 1867-1879, November.
- repec:ner:tilbur:urn:nbn:nl:ui:12-377500 is not listed on IDEAS
- Fudenberg, Drew & Levine, David K., 1988. "Open-loop and closed-loop equilibria in dynamic games with many players," Journal of Economic Theory, Elsevier, vol. 44(1), pages 1-18, February.
- Richard J. Gilbert, 1978. "Dominant Firm Pricing Policy in a Market for an Exhaustible Resource," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 385-395, Autumn.
- Gaudet, Gerard & Moreaux, Michel & Salant, Stephen W., 2002.
"Private Storage of Common Property,"
Journal of Environmental Economics and Management,
Elsevier, vol. 43(2), pages 280-302, March.
- GAUDET, Gérard & MOREAUX, Michel & SALANT, Stephen W., 1997. "Private Storage of Common Property," Cahiers de recherche 9704, Universite de Montreal, Departement de sciences economiques.
- Gaudet, G. & Moreaux, M. & Salant, S.W., 1997. "Private Storage of Common Property," Papers 97-08, Michigan - Center for Research on Economic & Social Theory.
- Groot, Fons & Withagen, Cees & de Zeeuw, Aart, 1992. "Note on the Open-Loop von Stackelberg Equilibrium in the Cartel versus Fringe Model," Economic Journal, Royal Economic Society, vol. 102(415), pages 1478-84, November.
- Roberts, Kevin, 1980. "The limit points of monopolistic competition," Journal of Economic Theory, Elsevier, vol. 22(2), pages 256-278, April.
- Kemp, Murray C & Long, Ngo Van, 1980. "On Two Folk Theorems Concerning the Extraction of Exhaustible Resources," Econometrica, Econometric Society, vol. 48(3), pages 663-73, April.
- Mukesh Eswaran & Tracy Lewis, 1985. "Exhaustible Resources and Alternative Equilibrium Concepts," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 459-73, August.
- Novshek, William & Sonnenschein, Hugo, 1980. "Small efficient scale as a foundation for Walrasian equilibrium," Journal of Economic Theory, Elsevier, vol. 22(2), pages 243-255, April.
- repec:cup:cbooks:9780521637329 is not listed on IDEAS
- Sinn, Hans-Werner, 2008.
"Public policies against global warming: A supply side approach,"
Munich Reprints in Economics
19638, University of Munich, Department of Economics.
- Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer, vol. 15(4), pages 360-394, August.
- A. M. Ulph & G. M. Folie, 1980. "Exhaustible Resources and Cartels: An Intertemporal Nash-Cournot Model," Canadian Journal of Economics, Canadian Economics Association, vol. 13(4), pages 645-58, November.
- Salo, Seppo & Tahvonen, Olli, 2001. "Oligopoly equilibria in nonrenewable resource markets," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 671-702, May.
When requesting a correction, please mention this item's handle: RePEc:mtl:montec:11-2010. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sharon BREWER)
If references are entirely missing, you can add them using this form.