IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Short run effects of bleaker prospects for oligopolistic producers of a non-renewable resource

Author Info

Listed author(s):
  • Kristine Grimsrud

    ()

  • Knut Einar Rosendahl
  • Halvor Briseid Storrøsten
  • Marina Tsygankova

    (Statistics Norway)

Abstract

In a non-renewable resource market with imperfect competition, the resource owners' supply is governed both by current demand and by the resource rent. New information regarding future market conditions will typically affect the resource rent and hence current supply. Bleaker prospects will tend to accelerate extraction. We show, however, that for resource owners with substantial resource stocks, a more pessimistic outlook may in fact slow down early extraction. The explanation is that for players with extensive resource stocks, the resource rent is limited and supply is more driven by current market considerations. As players with less resources accelerate their supply, it may be optimal for the large resource owners to cut back on their supply. We illustrate this in the case of the European gas market, finding that the shale gas revolution may lead to an accelerated supply by most gas producers, but a postponement of Russian gas extraction.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.ssb.no/nasjonalregnskap-og-konjunkturer/artikler-og-publikasjoner/_attachment/93607
Download Restriction: no

Paper provided by Statistics Norway, Research Department in its series Discussion Papers with number 733.

as
in new window

Length:
Date of creation: Jan 2013
Handle: RePEc:ssb:dispap:733
Contact details of provider: Postal:
P.O.Box 8131 Dep, N-0033 Oslo, Norway

Phone: (+47) 21 09 00 00
Fax: +47 - 62 88 55 95
Web page: http://www.ssb.no/en/
Email:


More information through EDIRC

Keywords: Exhaustible Resource Extraction; Cournot Competition; Natural Gas.;

Other versions of this item:

Find related papers by JEL classification:
  • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
  • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
  • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:

as
in new window


  1. 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.
  2. Holz, Franziska & von Hirschhausen, Christian & Kemfert, Claudia, 2008. "A strategic model of European gas supply (GASMOD)," Energy Economics, Elsevier, vol. 30(3), pages 766-788, May.
  3. Franziska Holz, Christian von Hirschhausen and Claudia Kemfert, 2009. "Perspectives of the European Natural Gas Markets Until 2025," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 137-150.
  4. Andersen, Trude Berg & Nilsen, Odd Bjarte & Tveteras, Ragnar, 2011. "How is demand for natural gas determined across European industrial sectors?," Energy Policy, Elsevier, vol. 39(9), pages 5499-5508, September.
  5. Chakravorty, Ujjayant & Leach, Andrew & Moreaux, Michel, 2011. "Would hotelling kill the electric car?," Journal of Environmental Economics and Management, Elsevier, vol. 61(3), pages 281-296, May.
  6. Reyer Gerlagh, 2011. "Too Much Oil," CESifo Economic Studies, CESifo, vol. 57(1), pages 79-102, March.
  7. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1998. "Increased Competition on the Supply Side of the Western European Natural Gas Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
  8. Michael Hoel, 2011. "The Supply Side of CO 2 with Country Heterogeneity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(4), pages 846-865, December.
  9. Polasky, Stephen, 1992. "Do oil producers act as 'Oil'igopolists?," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 216-247, November.
  10. Hans-Werner Sinn, 2008. "Public policies against global warming: a supply side approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 360-394, August.
  11. Tsygankova, Marina, 2010. "When is a break-up of Gazprom good for Russia?," Energy Economics, Elsevier, vol. 32(4), pages 908-917, July.
  12. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  13. Boyce, John R. & Vojtassak, Lucia, 2008. "An 'oil'igopoly theory of exploration," Resource and Energy Economics, Elsevier, vol. 30(3), pages 428-454, August.
  14. Geoffrey Heal, 1976. "The Relationship Between Price and Extraction Cost for a Resource with a Backstop Technology," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 371-378, Autumn.
  15. 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 1079-1093, October.
  16. Gijsbert T.J. Zwart, 2009. "European Natural Gas Markets: Resource Constraints and Market Power," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 151-166.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:

  1. Finn Roar Aune, Rolf Golombek , Arild Moe, Knut Einar Rosendahl and Hilde Hallre Le Tissier, 2015. "Liberalizing Russian Gas Markets - An Economic Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Adelman S).

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:733. 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: (L Maasø)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.