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Horizontal agreements about the use of a natural resource

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  • Van Moer, Geert

Abstract

I analyze horizontal agreements about the use of a natural resource. I consider a Cournot duopoly where production depends on two inputs, a natural resource and a basket of other resources, according to a production technology with constant returns to scale. I compare three regimes. (1) The competitive benchmark is defined such that firms operate with the cost-minimizing input combination. (2) A joint absolute usage target lowers the absolute usage of the natural resource. It also lowers the usage in relative terms, per unit of production, except with a fixed-proportions production technology. (3) A joint relative usage target mimics the competitive benchmark.

Suggested Citation

  • Van Moer, Geert, 2022. "Horizontal agreements about the use of a natural resource," MPRA Paper 113878, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113878
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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