Market Power, Resource Extraction and Pollution: Some Paradoxes and a Unified View

Luca Lambertini () and G. Leitmann

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We adopt a stepwise approach to the analysis of a dynamic oligopoly game in which production makes use of a natural resource and pollutes the environment, starting with simple models where firms' output is not a function of the natural resource to end up with a full-fledged model in which (i) the resource is explicitly considered as an input of production and (ii) the natural resource and pollution interact via the respective state equations. This allows us to show that the relationship between the welfare properties of the economic system and the intensity of competition is sensitive to the degree of accuracy with which the model is constructed.

JEL-codes: C73 H23 L13 O31 Q2 Q3 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-com and nep-env
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Chapter: Market Power, Resource Extraction and Pollution: Some Paradoxes and a Unified View (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp798

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