On the impact of cross-ownership in a common property renewable resource oligopoly *

Miao Dai (), Hassan Benchekroun () and Ilyass Dahmouni ()
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Hassan Benchekroun: Department of Economics [Montréal] - McGill University = Université McGill [Montréal, Canada]
Ilyass Dahmouni: GERAD - Groupe d’études et de recherche en analyse des décisions - EPM - École Polytechnique de Montréal - McGill University = Université McGill [Montréal, Canada] - HEC Montréal - HEC Montréal - UQAM - Université du Québec à Montréal = University of Québec in Montréal

CEE-M Working Papers from CEE-M, Universtiy of Montpellier, CNRS, INRA, Montpellier SupAgro

Abstract: This paper examines a dynamic game of exploitation of a productive asset by agents who subsequently sell the outcomes of their endeavours in an oligopolistic market where a subset of the oligopolists owns a share in each other's profits. A Markov Perfect Nash Equilibrium of the game is constructed and used to analyze the impact of cross-ownership on the equilibrium production strategies, the steady state resource stocks, the profitability of cross-ownership, and social welfare. We show that there exists an interval of resource stocks for which a symmetric cross-ownership can be profitable, even though such rival cross-shareholdings are unprofitable in the corresponding static equilibrium framework. Moreover, we demonstrate that cross-ownership may not only lead to a higher market output and social welfare in the short run, but also a higher steady-state stock, industry production, and social welfare in the long run. Thus, antitrust authorities should be cautious in ruling in the renewable resource industries.

Keywords: Cross-ownership; Renewable Resource; Closed-loop; Cournot Competition; Oligopoly; Shareholdings; Resource Stock; Antitrust (search for similar items in EconPapers)
Date: 2024
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04573659v1
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Working Paper: On the impact of cross-ownership in a common property renewable resource oligopoly * (2024)
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