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 language | English |
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Pages (from-to) | 243-257 |
Number of pages | 15 |
Journal | Environmental and Resource Economics |
Volume | 30 |
Issue number | 3 |
DOIs | |
Publication status | Published - 1 Mar 2005 |
Keywords
- Competitive equilibrium
- Natural resources
- Non-convexities
- Setup costs
- Shutdown costs