When additional resource stocks reduce welfare

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

doi:10.1016/j.jeem.2009.08.001

When additional resource stocks reduce welfare

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

Research output: Contribution to Journal › Article › Academic › peer-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 language	English
Pages (from-to)	109-114
Journal	Journal of Environmental Economics and Management
Volume	59
Issue number	1
DOIs	https://doi.org/10.1016/j.jeem.2009.08.001
Publication status	Published - 2010

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10.1016/j.jeem.2009.08.001

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title = "When additional resource stocks reduce welfare",

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. {\textcopyright} 2009 Elsevier Inc. All rights reserved.",

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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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DO - 10.1016/j.jeem.2009.08.001

M3 - Article

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