Oligopoly equilibria in nonrenewable resource markets

✍ Scribed by Seppo Salo; Olli Tahvonen

• Book ID: 104293716
• Publisher: Elsevier Science
• Year: 2001
• Tongue: English
• Weight: 565 KB
• Volume: 25
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(99)00048-2

✦ Synopsis

Most Nash}Cournot oligopoly models of nonrenewable resources apply open-loop equilibrium concepts and are based on physical resource depletion. This paper studies feedback equilibria and economic depletion. Assuming a$ne-quadratic functional forms, the existence, uniqueness, and explicit solutions for the equilibria are derived for duopoly and n-player oligopoly with multiple resource stocks. For the cases of nonquadratic criteria, we develop a numeric solution scheme for the Nash feedback equilibrium. This scheme is an application of a discrete time, discrete state controlled Markov chain approximation method originally developed for solving deterministic and stochastic dynamic optimization problems. In our Nash}Cournot equilibrium, the degree of concentration in supply declines over time whereas the previous models with physical depletion and open-loop equilibrium concepts predict that a Nash}Cournot resource market will develop in the direction of monopoly supply.