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), pp. 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)
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ePrint ID: 32970
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1996Published
Date Deposited: 28 Jun 2007
Last Modified: 16 Apr 2017 22:18
Further Information:Google Scholar
URI: http://eprints.soton.ac.uk/id/eprint/32970

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