Mothballing in a Duopoly: Evidence from a (Shale) Oil Market

Nicola Comincioli, Verena Hagspiel, Peter Kort, Francesco Menoncin, Raffaele Miniaci and Sergio Vergalli ()

Energy Economics, 2021, vol. 104, issue C

Abstract: The mothballing option has been studied in the literature, but mainly in decision theoretic frameworks. This paper looks at it from a strategic point of view and applies it to an incumbent-entrant framework. In particular, based on the recent strategic interactions between OPEC and the shale oil industry, we conduct a case study where the incumbent OPEC is a flexible producer that competes with a representative shale oil firm. Upon entry, the latter produces a fixed amount but it can apply the mothballing option in times of low demand.

Keywords: Crude oil; Shale oil; Mothballing; OPEC; Output game (search for similar items in EconPapers)
Date: 2021
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Related works:
Working Paper: Mothballing in a Duopoly: Evidence from a (Shale) Oil Market (2020)
Working Paper: Mothballing in a Duopoly: Evidence from a (Shale) Oil Market (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:104:y:2021:i:c:s0140988321004539

DOI: 10.1016/j.eneco.2021.105583

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