Monopoly Extraction of an Exhaustible Resource with Two Markets

Carolyn Fischer and Ramanan Laxminarayan

No 10704, Discussion Papers from Resources for the Future

Abstract: Although much has been written about the implications of monopoly power for the rate of extraction of natural resources, the specific case in which the resource can be sold in two markets with different elasticities of demand has escaped notice. We find that a monopolist facing two markets with differing iso-elastic demand schedules extracts more rapidly than the social planner, whether or not arbitrage prevents price discrimination between markets. This analysis is relevant in the case of many resources -such as natural gas used for power generation and household heating, or petroleum used for making plastics and as fuel.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 15
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
https://ageconsearch.umn.edu/record/10704/files/dp040008.pdf (application/pdf)

Related works:
Journal Article: Monopoly extraction of an exhaustible resource with two markets (2004)
Working Paper: Monopoly Extraction of an Exhaustible Resource with Two Markets (2004)
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:ags:rffdps:10704

DOI: 10.22004/ag.econ.10704

Access Statistics for this paper

More papers in Discussion Papers from Resources for the Future Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().