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Feedback Equilibria in a Dynamic Renewable Resource Oligopoly: Pre-Emption, Voracity and Exhaustion

Listed author(s):
  • Luca Lambertini

    ()

    (Department of Economics, University of Bologna, Italy; ENCORE, University of Amsterdam, The Netherlands; Barcelona Institute of Economics (IEB), Spain; RCEA, Rimini, Italy)

  • Andrea Mantovani

    ()

    (Department of Economics, University of Bologna, Italy; Barcelona Institute of Economics (IEB), Spain; RCEA, Rimini, Italy)

We revisit Benchekroun (2008) to describe a differential oligopoly game of resource extraction under static, linear feedback and nonlinear feedback strategies, to 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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File URL: http://www.rcea.org/RePEc/pdf/wp56_13.pdf
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Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 56_13.

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Date of creation: Oct 2013
Handle: RePEc:rim:rimwps:56_13
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  3. Reynolds, Stanley S., 1991. "Dynamic oligopoly with capacity adjustment costs," Journal of Economic Dynamics and Control, Elsevier, vol. 15(3), pages 491-514, July.
  4. Dockner, Engelbert J. & Sorger, Gerhard, 1996. "Existence and Properties of Equilibria for a Dynamic Game on Productive Assets," Journal of Economic Theory, Elsevier, vol. 71(1), pages 209-227, October.
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  6. Itaya, Jun-ichi & Shimomura, Koji, 2001. "A dynamic conjectural variations model in the private provision of public goods: a differential game approach," Journal of Public Economics, Elsevier, vol. 81(1), pages 153-172, July.
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  8. 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.
  9. Benchekroun, Hassan, 2008. "Comparative dynamics in a productive asset oligopoly," Journal of Economic Theory, Elsevier, vol. 138(1), pages 237-261, January.
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  14. Lane, Philip R & Tornell, Aaron, 1996. "Power, Growth, and the Voracity Effect," Journal of Economic Growth, Springer, vol. 1(2), pages 213-241, June.
  15. Fershtman, Chaim & Kamien, Morton I, 1987. "Dynamic Duopolistic Competition with Sticky Prices," Econometrica, Econometric Society, vol. 55(5), pages 1151-1164, September.
  16. Dutta, Prajit K & Sundaram, Rangarajan K, 1993. "The Tragedy of the Commons?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(3), pages 413-426, July.
  17. Benchekroun, Hassan, 2003. "Unilateral production restrictions in a dynamic duopoly," Journal of Economic Theory, Elsevier, vol. 111(2), pages 214-239, August.
  18. Philip R. Lane & Aaron Tornell, 1999. "The Voracity Effect," American Economic Review, American Economic Association, vol. 89(1), pages 22-46, March.
  19. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, October.
  20. Fujiwara, Kenji, 2008. "Duopoly can be more anti-competitive than monopoly," Economics Letters, Elsevier, vol. 101(3), pages 217-219, December.
  21. Reynolds, Stanley S, 1987. "Capacity Investment, Preemption and Commitment in an Infinite Horizon Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 69-88, February.
  22. H. Scott Gordon, 1954. "The Economic Theory of a Common-Property Resource: The Fishery," Journal of Political Economy, University of Chicago Press, vol. 62, pages 124-124.
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