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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Description/Abstract

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.

Item Type: Article
ISSNs: 0020-6598 (print)
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HA Statistics
Divisions: University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 32970
Date Deposited: 28 Jun 2007
Last Modified: 27 Mar 2014 18:20
URI: http://eprints.soton.ac.uk/id/eprint/32970

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