Short Run Effects of Bleaker Prospects for Oligopolistic Producers of a Non-renewable Resource

Kristine Grimsrud, Knut Einar Rosendahl, Halvor B. Storrøsten, and Marina Tsygankova
Authors registered in the RePEc Author Service: Kristine M. Grimsrud and Knut Einar Rosendahl

The Energy Journal, 2016, vol. Volume 37, issue Number 3

Abstract: In a non-renewable resource market with imperfect competition, both the resource rent and the current market influence large resource owners' optimal supply. New information regarding future market conditions that affect the resource rent will consequently impact current supply. Bleaker demand prospects tend to accelerate resource extraction. We show, however, that it may slow down early extraction by producers with sufficiently large reserves and thus small resource rents. The reason is that the supply from such producers is driven more by current market considerations than concern about resource scarcity. As producers with relatively smaller reserves accelerate their supply in response to bleaker demand prospects, producers with sufficiently large reserves will reduce their current supply. The surge in shale gas production will reduce residual demand facing suppliers to the European gas market. We demonstrate the effects of this in a numerical model. Most gas producers accelerate their supply while Russia reduces its supply slightly and thus loses market shares even before the additional gas enters the market.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.iaee.org/en/publications/ejarticle.aspx?id=2786 (text/html)
Access to full text is restricted to IAEE members and subscribers.

Related works:
Journal Article: Short Run Effects of Bleaker Prospects for Oligopolistic Producers of a Non-renewable Resource (2016)
Working Paper: Short Run Effects of Bleaker Prospects for Oligopolistic Producers of a Non-Renewable Resource (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aen:journl:ej37-3-storrosten

Ordering information: This journal article can be ordered from
http://www.iaee.org/en/publications/ejsearch.aspx

Access Statistics for this article

More articles in The Energy Journal from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().