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

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  • Morin-Chasse, Remi
  • Herrmann, Markus

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.

Suggested Citation

  • Morin-Chasse, Remi & Herrmann, Markus, 2014. "On the Multiplicity of Equilibrium Strategies in a Non-Renewable Natural Resource Duopoly," Working Papers 181203, University of Laval, Center for Research on the Economics of the Environment, Agri-food, Transports and Energy (CREATE).
    • Handle: RePEc:ags:ulavwp:181203
    DOI: 10.22004/ag.econ.181203
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental Economics and Policy;

    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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