Feedback Equilibria in a Dynamic Renewable Resource Oligopoly: Pre-Emption, Voracity and Exhaustion

Quaderni - Working Paper DSE N° 890

16 Pages Posted: 22 Jun 2013

See all articles by Luca Lambertini

Luca Lambertini

University of Bologna - Department of Economics

Andrea Mantovani

University of Toulouse - Toulouse Business School

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Date Written: June 21, 2013

Abstract

We extend Fujiwara’s (2008) model to describe a differential oligopoly game of resource extraction under static, linear feedback and nonlinear feedback strategies, generalising his result that steady state feedback outputs are lower than monopoly and static oligopoly equilibrium outputs for any number of firms. Additionally, we show that (i) feedback rules entail resource exhaustion for a finite number of firms; and (ii) feedback strategies are more aggressive than static ones as long as the resource stock is large enough, in accordance with the acquired view based on the traditional pre-emption argument associated with feedback information.

Keywords: dynamic oligopoly, renewable resources, feedback strategies

JEL Classification: C73, L13, Q2

Suggested Citation

Lambertini, Luca and Mantovani, Andrea, Feedback Equilibria in a Dynamic Renewable Resource Oligopoly: Pre-Emption, Voracity and Exhaustion (June 21, 2013). Quaderni - Working Paper DSE N° 890, Available at SSRN: https://ssrn.com/abstract=2283126 or http://dx.doi.org/10.2139/ssrn.2283126

Luca Lambertini (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 051 2092600 (Phone)
+39 051 2092664 (Fax)

Andrea Mantovani

University of Toulouse - Toulouse Business School ( email )

20, bd Lascrosses
BP 7010
Toulouse, 31068
France

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