Ultimate recovery of an exhaustible resource under different market structures

DOI10.1016/0095-0696(84)90031-7MaRDI QIDQ797474zbMATH OpenOpenAlexFDO

Authors Mukesh Eswaran, Tracy R. Lewis

Publication date 1984

Published in Journal of Environmental Economics and Management (Search for Journal in Brave)

Full work available at URL https://doi.org/10.1016/0095-0696(84)90031-7

zbMATH Keywords

competitive resource depletionCournot- Nash equilibriumdifferent market structuresenvironmental economicsexhaustible resourcerate of extraction

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24) Economic growth models (91B62) Environmental economics (natural resource models, harvesting, pollution, etc.) (91B76)

Review text

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.

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(11)

• Resource extraction and market structure
• Existence and transversality conditions for a general `unbounded-horizon' model of the mining firm
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• Existence of equilibria in exhaustible resource industries
• A partial characterization of a history-dependent, subgame-perfect equilibrium: the case of an exhaustible resource duopoly
• Expectations about change in market structure and natural resource extraction
• Hotelling rents in Hotelling space: Product differentiation in exhaustible resource markets
• A Theory of 'Oil'Igopoly: Cournot Equilibrium in Exhaustible Resource Markets with Fixed Supplies
• THE 2012 LAWRENCE R. KLEIN LECTURE: BUBBLES IN PRICES OF EXHAUSTIBLE RESOURCES*
• OPTIMAL TARIFFS ON EXHAUSTIBLE RESOURCES: THE CASE OF QUANTITY-SETTING
• A microeconometric test of the theory of exhaustible resources

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