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When additional resource stocks reduce welfare

Hassan Benchekroun (), Alex Halsema and Cees Withagen

Journal of Environmental Economics and Management, 2010, vol. 59, issue 1, 109-114

Abstract: In the dominant firm model, we show that an increase of the fringe's reserves of a nonrenewable resource may lead to a decrease in aggregate discounted social welfare. This happens when the difference between the fringe's extraction cost and the dominant firm's is positive and large enough. We also show that welfare might decrease if the fringe's marginal extraction cost decreases.

Keywords: Nonrenewable; resources; Dominant; firm; versus; fringe; Nash; equilibrium (search for similar items in EconPapers)
Date: 2010
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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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