When additional resource stocks reduce welfare

In the dominant firm model, we show that an increase of the fringe's reserves of a nonrenewable resource may lead to a decrease in aggregate discounted social welfare. This happens when the difference between the fringe's extraction cost and the dominant firm's is positive and large enough. We also show that welfare might decrease if the fringe's marginal extraction cost decreases.

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Year of publication:	2010
Authors:	Benchekroun, Hassan ; Halsema, Alex ; Withagen, Cees
Published in:	Journal of Environmental Economics and Management. - Elsevier, ISSN 0095-0696. - Vol. 59.2010, 1, p. 109-114
Publisher:	Elsevier
Keywords:	Nonrenewable resources Dominant firm versus fringe Nash equilibrium

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008488178