Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource
Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource
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.
825-849
Karp, L.
832e565b-4cb5-486e-847d-9dec6c80d39c
1996
Karp, L.
832e565b-4cb5-486e-847d-9dec6c80d39c
Karp, L.
(1996)
Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource.
International Economic Review, 37 (4), .
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.
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Published date: 1996
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Local EPrints ID: 32970
URI: http://eprints.soton.ac.uk/id/eprint/32970
ISSN: 0020-6598
PURE UUID: 3edbce24-612d-4379-9ba0-ad17eb3c3c93
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Date deposited: 28 Jun 2007
Last modified: 08 Jan 2022 09:56
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L. Karp
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