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On the multiplicity of open-loop equilibrium strategies in a non-renewable natural resource duopoly

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  • Morin Chassé, Rémi
  • Herrmann, Markus

Abstract

We identify two possible open-loop equilibrium configurations for a non-renewable resource duopoly in a discrete-time framework. For the purpose of illustration, we characterize 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.

Suggested Citation

  • Morin Chassé, Rémi & Herrmann, Markus, 2016. "On the multiplicity of open-loop equilibrium strategies in a non-renewable natural resource duopoly," Resource and Energy Economics, Elsevier, vol. 46(C), pages 101-113.
    • Handle: RePEc:eee:resene:v:46:y:2016:i:c:p:101-113
    DOI: 10.1016/j.reseneeco.2016.09.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Open-loop equilibrium; Closed-loop equilibrium; Duopoly; Non-renewable resource;
    All these keywords.

    JEL classification:

    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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