Strong Time-Consistency in the Cartel-versus-Fringe Model

A.M. Groot, C.A.A.M. Withagen, A.J. de Zeeuw

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Abstract

In the seventies and eighties, the theory of exhaustible natural resources developed a branch, which was called the cartel-versus-fringe model, to characterize markets with one large coherent cartel and a big number of small suppliers named the fringe.It was considered appropriate to use the von Stackelberg solution concept but because solutions could only be derived in an open-loop framework time-inconsistency resulted.This paper solves time-inconsistency in the cartel-versus-fringe model and provides the feedback von Stackelberg equilibrium for all cost configurations.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages32
Volume1996-22
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-22

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Keywords

  • natural resources
  • cartels
  • game theory
  • consistency

Cite this

Groot, A. M., Withagen, C. A. A. M., & de Zeeuw, A. J. (1996). Strong Time-Consistency in the Cartel-versus-Fringe Model. (CentER Discussion Paper; Vol. 1996-22). Microeconomics.