On the Multiplicity of Equilibrium Strategies in a Non-Renewable Natural Resource Duopoly

Remi Morin-Chasse and Markus Herrmann
Authors registered in the RePEc Author Service: Rémi Morin Chassé

No 181203, Working Papers from University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE)

Abstract: We identify two possible equilibrium configurations for a non-renewable resource duopoly in a discrete-time framework. For the purpose of illustration, we suppose initial endowments of firms that allow for a maximum of two extraction periods. In the first possible equilibrium, the duopoly exists for two periods, while in the second possible equilibrium, the duopoly lasts only for one period and the firm with the higher initial endowment becomes a monopolist in the second and last period. As neither equilibrium configuration dominates the other for both firms at the same time, it is unclear whether firms acting simultaneously can coordinate on one particular configuration.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Date: 2014-08
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Working Paper: On the Multiplicity of Equilibrium Strategies in a Non-Renewable Natural Resource Duopoly (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ulavwp:181203

DOI: 10.22004/ag.econ.181203

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