When additional resource stocks reduce welfare

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

Research output: Contribution to journalArticle

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.
LanguageEnglish
Pages109-114
JournalJournal of Environmental Economics and Management
Volume59
Issue number1
DOIs
StatePublished - 2010

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nonrenewable resource
resource
cost
firm
Resources
Costs
Dominant firm
social welfare
Social welfare
Non-renewable resources

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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. {\circledC} 2009 Elsevier Inc. All rights reserved.",
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When additional resource stocks reduce welfare. / Benchekroun, H.; Halsema, A.N.; Withagen, C.A.A.M.

In: Journal of Environmental Economics and Management, Vol. 59, No. 1, 2010, p. 109-114.

Research output: Contribution to journalArticle

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AB - 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.

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