Exhaustible resources and industrial structure: a Nash - Cournot approach to the world oil market

Journal Article · Fri Oct 01 00:00:00 EDT 1976 · J. Polit. Econ.; (United States)

DOI:https://doi.org/10.1086/260497· OSTI ID:7328604

Salant, S W

The theory of exhaustible resources is modified to take account of the industrial organization of the world oil market. The cartel is viewed as a unified enterprise which dominates other extractors because of its larger reserves. Equilibrium price and sales paths are derived giving neither the dominant extractor nor the competitive fringe any incentive to change its intertemporal behavior. Under standard but simplified cost assumptions, it is shown that a disproportionate share of the increased profits resulting from the formation of the cartel goes to nonmembers and that the cartel's restriction on sales eventually leaves it the sole supplier of oil.

• OSTI ID: 7328604
• Journal Information: J. Polit. Econ.; (United States), Journal Name: J. Polit. Econ.; (United States) Vol. 84:5; ISSN JLPEA
• Country of Publication: United States
• Language: English

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