Oligopoly meets oligopsony: The case of permits

Franz Wirl

Journal of Environmental Economics and Management, 2009, vol. 58, issue 3, 329-337

Abstract: This paper derives market equilibria (in demand functions and in bidding strategies) between oligopolists and oligopsonists in a market with intermediates and no competition in final markets. To the best of my knowledge, this theme has not been explored, despite two observations: Firstly, the commonly applied framework of non-competitive and competitive fringe firms has implausible properties for the limit of purely strategic players. Secondly, real world cases correspond at least potentially to such strategic interactions, e.g., non-competitive players selling and buying permits (CO2 and SO2). The major implications are that these non-competitive markets are characterized by a kind of double marginalization (on the demand and the supply side) resulting in too little trade and wrong price signals.

Keywords: Permit; market; Oligopoly; versus; oligopsony; Double; marginalization (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:58:y:2009:i:3:p:329-337

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