Competition in markets for depletable resources with setup costs

Carolyn Fischer*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

This paper analyzes the impact on exhaustible resource markets of setup costs, a sparsely analyzed category of nonconvex production technologies. This paper proves that, even under idealized circumstances for competition, a competitive equilibrium will fail to exist in the presence of setup costs, for any utility and cost functions such that a planner would exploit exhaustible resource pools sequentially.

Original languageEnglish
Pages (from-to)243-257
Number of pages15
JournalEnvironmental and Resource Economics
Volume30
Issue number3
DOIs
Publication statusPublished - 1 Mar 2005

Keywords

  • Competitive equilibrium
  • Natural resources
  • Non-convexities
  • Setup costs
  • Shutdown costs

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