Oligopoly and exploration for exhaustible natural resources
How does oligopoly behavior affect the market for exhaustible natural resources. This work analyzes the incentives of firms to produce and explore for reserves of an exhaustible natural resource in a game theoretic framework. It is divided into three main chapters, two theoretical and one empirical, each of which can be read independently of the others. Chapter 2 analyzes a model of Cournot-Nash oligopolists who have the chance to explore for additional reserves of an exhaustible natural resource. First analyzed is a two-period model in which all firms produce in both periods. Also considered is a model in which some firms are small and only produce in the first period. Chapter 3 analyzes a Cournot-Nash duopoly model in which each firm is uncertain about its stock size. Firms have the choice of whether to explore or not. Value of the exploration to the firm, is solved for, which is the increase in profits to the firm when it gains information prior to extracting. Chapter 4 is an empirical chapter in which several of the theoretical propositions proven in chapters 2 and 3 are tested, using data from the oil and gas industries. The test is whether firms with greater amounts of proven stock produce a smaller share of that stock in any given time period.
- Research Organization:
- Michigan Univ., Ann Arbor (USA)
- OSTI ID:
- 6552853
- Country of Publication:
- United States
- Language:
- English
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