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

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.


Issue Date:
2014-08
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/181203
PURL Identifier:
http://purl.umn.edu/181203
JEL Codes:
Q30; D43
Series Statement:
CREATE Working Papers
2014-6




 Record created 2017-04-01, last modified 2020-10-28

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