Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource
Karp, L. (1996) Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource. International Economic Review, 37, (4), 825-849.
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We study a Markov equilibrium for the case where a monopolist extracts a nonrenewable resource which is converted to a durable good, which then depreciates at a constant rate. We show that in a stationary, continuous time model (infinite horizon, infinitesimal period of commitment) monopoly power can be disadvantageous. Numerical experiments confirm that this can also occur in a finite horizon, discrete model. This result is compared with previous examples of disadvantageous market power, obtained using two-period models.
|Subjects:||H Social Sciences > HB Economic Theory
H Social Sciences > HA Statistics
|Divisions :||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Accepted Date and Publication Date:||
|Date Deposited:||28 Jun 2007|
|Last Modified:||31 Mar 2016 11:59|
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