Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly

Kenji Fujiwara (kenjifujiwara@kwansei.ac.jp) and Ngo Long

No 76, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Formulating a dynamic game model of a world exhaustible resource market, this paper studies welfare implications of Stackelberg leaderships for an individual country and the world. We overcome the problem of time-inconsistency by imposing a \credibility condition" on the Markovian strategy of the Stackelberg leader. Under this condition, we show that the presence of a global Stackelberg leader leaves the follower worse o relative to the Nash equilibrium. Moreover, the world welfare is highest in the Nash equilibrium as compared with the two Stackelberg equilibria.

Keywords: Dynamic game; Exhaustible resource; Stackelberg leadership; Feedback equilibria (search for similar items in EconPapers)
Pages: 32 pages
Date: 2011-09, Revised 2011-09
New Economics Papers: this item is included in nep-com
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Citations: View citations in EconPapers (9)

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http://192.218.163.163/RePEc/pdf/kgdp76.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly (2011)
Working Paper: Welfare Implications of Leadership in a Resource Market Under Bilateral Monopoly (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:76

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