When additional resource stocks reduce welfare

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

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

In the dominant firm model, we show that an increase of the fringe's reserves of a nonrenewable resource may lead to a decrease in aggregate discounted social welfare. This happens when the difference between the fringe's extraction cost and the dominant firm's is positive and large enough. We also show that welfare might decrease if the fringe's marginal extraction cost decreases. © 2009 Elsevier Inc. All rights reserved.
Original languageEnglish
Pages (from-to)109-114
JournalJournal of Environmental Economics and Management
Volume59
Issue number1
DOIs
Publication statusPublished - 2010

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