Dominant-firm pricing policy in a market for an exhaustible resource
Journal Article
·
· Bell J. Econ.; (United States)
The paper describes a von Stackelberg model of pricing behavior by a dominant firm in a market for an exhaustible resource. The results obtained differ dramatically from those that characterize a pure monopoly. If the marginal production cost in the competitive fringe is constant, the optimal dominant-firm price strategy is independent of its own costs and is determined by the characteristics of the fringe. The market price rises monotonically until the reserves of the fringe are exhausted. In contrast, if the production cost of the fringe is constant only up to a capacity constraint, the cartel may maximize profits by acting as a classical limit-pricing firm. 27 references.
- Research Organization:
- Univ. of California, Berkeley
- OSTI ID:
- 6606153
- Journal Information:
- Bell J. Econ.; (United States), Journal Name: Bell J. Econ.; (United States) Vol. 9:2; ISSN BJECD
- Country of Publication:
- United States
- Language:
- English
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