On nonrenewable resource oligopolies: the asymmetric case

H. Benchekroun, A.N. Halsema, C.A.A.M. Withagen

Research output: Contribution to JournalArticle

Abstract

We give a full characterization of the open-loop Nash equilibrium of a nonrenewable resource game between two types of firms differing in extraction costs. We show that (i) there almost always exists a phase where both types of firms supply simultaneously, (ii) when the high cost mines are exploited by a number of firms that goes to infinity the equilibrium approaches the cartel-versus-fringe equilibrium with the fringe firms acting as price takers, and (iii) the cheaper resource may not be exhausted first, a violation of the Herfindahl rule, that may be detrimental to social welfare. © 2009 Elsevier B.V. All rights reserved.
Original languageEnglish
Pages (from-to)1867-1879
JournalJournal of Economic Dynamics and Control
Volume33
Issue number11
DOIs
Publication statusPublished - 2009

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