On nonrenewable resource oligopolies: The asymmetric case

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

Research output: Contribution to journalArticleScientificpeer-review

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.
Original languageEnglish
Pages (from-to)1867-1879
JournalJournal of Economic Dynamics and Control
Volume33
Issue number11
Publication statusPublished - 2009

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Oligopoly
Resources
Costs
Welfare
Nash Equilibrium
Infinity
Game
Business
Non-renewable resources

Cite this

Benchekroun, H., Halsema, A., & Withagen, C. A. A. M. (2009). On nonrenewable resource oligopolies: The asymmetric case. Journal of Economic Dynamics and Control, 33(11), 1867-1879.
Benchekroun, H. ; Halsema, A. ; Withagen, C.A.A.M. / On nonrenewable resource oligopolies : The asymmetric case. In: Journal of Economic Dynamics and Control. 2009 ; Vol. 33, No. 11. pp. 1867-1879.
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Benchekroun, H, Halsema, A & Withagen, CAAM 2009, 'On nonrenewable resource oligopolies: The asymmetric case', Journal of Economic Dynamics and Control, vol. 33, no. 11, pp. 1867-1879.

On nonrenewable resource oligopolies : The asymmetric case. / Benchekroun, H.; Halsema, A.; Withagen, C.A.A.M.

In: Journal of Economic Dynamics and Control, Vol. 33, No. 11, 2009, p. 1867-1879.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - On nonrenewable resource oligopolies

T2 - The asymmetric case

AU - Benchekroun, H.

AU - Halsema, A.

AU - Withagen, C.A.A.M.

PY - 2009

Y1 - 2009

N2 - 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.

AB - 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.

M3 - Article

VL - 33

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EP - 1879

JO - Journal of Economic Dynamics and Control

JF - Journal of Economic Dynamics and Control

SN - 0165-1889

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ER -

Benchekroun H, Halsema A, Withagen CAAM. On nonrenewable resource oligopolies: The asymmetric case. Journal of Economic Dynamics and Control. 2009;33(11):1867-1879.