Ultimate recovery of an exhaustible resource under different market structures (Q797474)

Each of N firms owns a fraction of some exhaustible resource. Each firm sets its own policy concerning the rate of extraction of the resource; the goal being the maximization of a discounted profit over time. The profit depends on extraction costs, and, through demand, on the action taken by the competitors. A Cournot-Nash equilibrium is established under some technical, restrictive yet natural, conditions. Then economic features of the equilibrium are explored, among them the relative extraction rates, inequality, hence inefficiency, of marginal recovery costs, dependence of supply and profit on the number N of firms.