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Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource

Record type: Article

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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Citation

Karp, L. (1996) Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource International Economic Review, 37, (4), pp. 825-849.

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Published date: 1996

Identifiers

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: 17 Jul 2017 15:54

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