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Strong Time-Consistency in the Cartel-versus-Fringe Model

Author

Listed:
  • Groot, A.M.
  • Withagen, C.A.A.M.
  • de Zeeuw, A.J.

    (Tilburg University, Center For Economic Research)

Abstract

In the seventies and eighties, the theory of exhaustible natural resources developed a branch, which was called the cartel-versus-fringe model, to characterize markets with one large coherent cartel and a big number of small suppliers named the fringe.It was considered appropriate to use the von Stackelberg solution concept but because solutions could only be derived in an open-loop framework time-inconsistency resulted.This paper solves time-inconsistency in the cartel-versus-fringe model and provides the feedback von Stackelberg equilibrium for all cost configurations.
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Suggested Citation

  • Groot, A.M. & Withagen, C.A.A.M. & de Zeeuw, A.J., 1996. "Strong Time-Consistency in the Cartel-versus-Fringe Model," Discussion Paper 1996-22, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:d6fb278a-1af5-4097-ae40-78511b16f527
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    References listed on IDEAS

    as
    1. Karp, Larry & Newbery, David M., 1993. "Intertemporal consistency issues in depletable resources," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 19, pages 881-931, Elsevier.
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