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Author: | Karp, L. |
Title: | Monopoly power can be disadvantageous in the extraction of a durable nonrenewable resource |
Journal: | International Economic Review
1996 : NOV, VOL. 37:4, p. 825-850 |
Index terms: | MONOPOLY POWER ECONOMICS |
Language: | eng |
Abstract: | The author studies a Markov equilibrium for the case where a monopolist extracts a nonrenewable resource which is converted to a durable good, which then depreciates at a constant rate. The author shows that in a stationary, continuous time model (infinite horizon, infinitesimal period of commitment) monopoly power can be disadvantageous. Numerical experiments confirm that this can also occur in a finite horizon, discrete model. This result is compared with previous examples of disadvantageous market power, obtained using two-period models. |
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