Strategic Resource Dependence

Reyer Gerlagh and Matti Liski ()

No 2008.72, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We consider a situation where an exhaustible-resource seller faces demand from a buyer who has a perfect substitute but there is a time-to-build delay for the substitute. We that find in this simple framework the basic implications of the Hotelling model (1931) are reversed: over time the stock declines but supplies increase up to the point where the buyer decides to switch. Under such a threat of demand change, the supply does not reflect the true current resource scarcity but leads to increased future scarcity, felt during the transition to the substitute supplies. The analysis suggests a perspective on costs of oil dependence.

Keywords: Dynamic Bilateral Monopoly; Markov-Perfect Equilibrium; Depletable Resources; Energy; Alternative Fuels; Oil Dependence (search for similar items in EconPapers)
JEL-codes: D4 D9 O33 Q40 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2008-072.pdf (application/pdf)

Related works:
Journal Article: Strategic resource dependence (2011)
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:fem:femwpa:2008.72

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).