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Duopoly in Exhaustible Resource Exploration and Extraction

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  • John Hartwick
  • Perry 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. A mixed game where there is co-operation "upstream" in exploration and Cournot competition "downstream" in quantities extracted is investigated. We also note the increasing returns to scale in exploration can introduce an unstable interior solution with a corner solution the presumed stable equilibrium.

Suggested Citation

  • John Hartwick & Perry Sadorsky, 1988. "Duopoly in Exhaustible Resource Exploration and Extraction," Working Paper 721, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:721
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    Cited by:

    1. 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.
    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. 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.
    4. 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.
    5. Pickering, Andrew, 2008. "The oil reserves production relationship," Energy Economics, Elsevier, vol. 30(2), pages 352-370, March.
    6. 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.
    7. 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.
    8. Alla Fridman, 2018. "Partial privatization in an exhaustible resource industry," Journal of Economics, Springer, vol. 124(2), pages 159-173, June.
    9. Boyce, John R. & Vojtassak, Lucia, 2008. "An 'oil'igopoly theory of exploration," Resource and Energy Economics, Elsevier, vol. 30(3), pages 428-454, August.

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