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Product quality differentiation in a renewable resource oligopoly

Author

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  • Colombo, Luca
  • Labrecciosa, Paola

Abstract

The typical assumption in the literature on oligopoly exploitation of natural resources is that all units of extracted resource have the same commercial value. We depart from this assumption by allowing a constant share θ of the available resource stock to be associated with higher commercial value, thus introducing product quality differentiation. We interpret θ as a measure of resource quality and study the impact of an increase in θ on resource exploitation and social welfare. The main finding of our analysis is that an increase in resource quality can be welfare-reducing.

Suggested Citation

  • Colombo, Luca & Labrecciosa, Paola, 2022. "Product quality differentiation in a renewable resource oligopoly," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    • Handle: RePEc:eee:jeeman:v:111:y:2022:i:c:s0095069621001303
    DOI: 10.1016/j.jeem.2021.102583
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    References listed on IDEAS

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    More about this item

    Keywords

    Renewable resources; Differential games; Product quality; Social welfare; Productive asset oligopoly;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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