Temporary Natural Resource Cartels
Hassan Benchekroun (),
Gérard Gaudet () and
Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ
We analyze the behavior of a nonrenewable resource cartel that anticipates being forced, at some date in the future, to break-up into an oligopolistic market in which its members will then have to compete as rivals. Under reasonable assumptions about the value function of the individual firms in the oligopolistic equilibrium that follows the break-up, we show that the cartel will then produce more over the same interval of time than it would if there were no threat of dissolution, and that its rate of extraction is a decreasing function of the cartel’s life; that there are circumstances under which the cartel will attach a negative marginal value to the resource stocks, in which case the rate of depletion will be increasing over time during the cartel phase; that, for a given date of dissolution, the equilibrium stocks allocated to the post-cartel phase will increase as a function of the total initial stocks, whereas those allocated to the cartel phase will increase at first, but begin decreasing beyond some level of the total initial stocks.
Keywords: cartels; dissolution; nonrenewable natural resources (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Journal Article: Temporary natural resource cartels (2006)
Working Paper: Temporary Natural Resource Cartels (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:03-2004
Access Statistics for this paper
More papers in Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ Contact information at EDIRC.
Bibliographic data for series maintained by Sharon BREWER ().