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Duopoly in Exhaustible Resource Exploration and Extraction

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  • J. M. Hartwick
  • P. A. Sadorsky

Abstract

Strategic considerations of exploration and extraction are investigated in a two-player, two-period, two-stage perfect equilibrium framework. Relative to two "plant" monopoly, the duopolists explore more and extract more period by period. A mixed game in which there is cooperation "upstream" in exploration and Cournot competition "downstream" in quantities extracted is investigated. The authors also note that increasing returns to scale in exploration can introduce an unstable solution with a corner solution the presumed stable equilibrium.

Suggested Citation

  • J. M. Hartwick & P. A. Sadorsky, 1990. "Duopoly in Exhaustible Resource Exploration and Extraction," Canadian Journal of Economics, Canadian Economics Association, vol. 23(2), pages 276-293, May.
    • Handle: RePEc:cje:issued:v:23:y:1990:i:2:p:276-93
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    Cited by:

    1. Kristine Grimsrud & Knut Einar Rosendahl & Halvor B. Storrøsten & Marina Tsygankova, 2016. "Short Run Effects of Bleaker Prospects for Oligopolistic Producers of a Non-renewable Resource," The Energy Journal, , vol. 37(3), pages 293-314, July.
    2. Laurent-Lucchetti, Jérémy & Santugini, Marc, 2012. "Ownership risk and the use of common-pool natural resources," Journal of Environmental Economics and Management, Elsevier, vol. 63(2), pages 242-259.
    3. Boyce, John R. & Vojtassak, Lucia, 2008. "An 'oil'igopoly theory of exploration," Resource and Energy Economics, Elsevier, vol. 30(3), pages 428-454, August.
    4. Polasky, Stephen & Bin, Okmyung, 2001. "Entry Deterrence and Signaling in a Nonrenewable Resource Model," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 235-256, November.
    5. Rasmus Noss, Bang & Trellevik, Lars-Kristian Lunde, 2022. "Transition to Marine Mining?," Discussion Papers 2022/9, Norwegian School of Economics, Department of Business and Management Science.
    6. Pickering, Andrew, 2008. "The oil reserves production relationship," Energy Economics, Elsevier, vol. 30(2), pages 352-370, March.
    7. Rasmus Noss Bang & Lars-Kristian Lunde Trellevik, 2023. "Reserve-dependent capital efficiency, cross-sector competition, and mineral security considerations in mineral industry transition," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(3), pages 383-400, September.
    8. Janmaat, John, 2008. "Playing monopoly in the creek: Imperfect competition, development, and in-stream flows," Resource and Energy Economics, Elsevier, vol. 30(3), pages 455-473, August.
    9. Alla Fridman, 2018. "Partial privatization in an exhaustible resource industry," Journal of Economics, Springer, vol. 124(2), pages 159-173, June.

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