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

Rémi Morin-Chassé and Markus Herrmann ()
Authors registered in the RePEc Author Service: Rémi Morin Chassé

Cahiers de recherche CREATE from 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: Open-loop equilibrium; closed-loop equilibrium; duopoly; non-renewable resource (search for similar items in EconPapers)
JEL-codes: D43 Q30 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-bec and nep-com
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