On comparing monopoly and competition in exhaustible resource exploitation

Gaudet, Gérard; Lasserre, Pierre

doi:10.1016/0095-0696(88)90035-6

Cited by 48 publications

(39 citation statements)

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“…In Appendix C, we borrow the approach of Gaudet and Lasserre (1988), also used for instance in Fischer and Laxminarayan (2005) or Daubanes and Lasserre (2014). In these models, the marginal cost of developing an amount of exploitable reserves is rising, as when resource units are developed in order of their respective development costs; reserves are established so as to equate the marginal development cost with the implicit value of 36 marginal reserves.…”

Section: B Reserves' Productionmentioning

confidence: 99%

“…Following Gaudet and Lasserre (1988), assume that the production of those reserves takes place at date 0 and is subject to decreasing returns to scale because, as exploration prospects are finite, it must be more and more difficult to produce new reserves. When reserves' production is costly, it cannot be optimum to produce more than what is to be exploited.…”

Section: Appendix To Section 5: Costly Exploration and Development mentioning

confidence: 99%

“…We also elaborate on exploration and reserve development (e.g. Gaudet and Lasserre, 1988), as well as on the multiplicity of demand segments (e.g. Hoel, 1984).…”

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confidence: 99%

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Limit pricing and the (in)effectiveness of the carbon tax

Sá

Daubanes

2016

Journal of Public Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Demand for oil is very price inelastic. Facing such demand, an extractive cartel induces the highest price that does not destroy its demand, unlike the conventional Hotelling analysis: the cartel tolerates ordinary substitutes to its oil but deters high-potential ones. Limit-pricing equilibria of non-renewable-resource markets sharply differ from usual Hotelling outcomes. Terms of use: Documents in EconStor mayResource taxes have no effect on current extraction; extraction may only be reduced by supporting its ordinary substitutes. The carbon tax applies to oil and also penalizes its ordinary (carbon) substitutes, inducing the cartel to increase current oil production. The carbon tax further affects ultimately-abandoned oil reserves ambiguously.JEL-Code: Q300, L120, H210, Q420.

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Section: B Reserves' Productionmentioning

confidence: 99%

Section: Appendix To Section 5: Costly Exploration and Development mentioning

confidence: 99%

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Limit pricing and the (in)effectiveness of the carbon tax

Sá

Daubanes

2016

Journal of Public Economics

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“…Just as income is earned and fully used up in demand theory, reserves are developed and then completely exhausted, as in Gaudet and Lasserre (1988) and Fischer and Laxminarayan (2005). 4 Exploration and development are sensitive to the rent that accrues to the extractor during the exploitation of the resource.…”

Section: Introductionmentioning

confidence: 99%

“…Although exploration and exploitation often take place simultaneously at the aggregate level (e.g. Pindyck, 1978, andQuyen, 1988;see Cairns, 1990, for a comprehensive survey of related contributions), at the microeconomic level of a deposit they occur in a sequence, as in Lasserre (1988) andLaxminarayan (2005). This way to model the supply of reserves is particularly adapted to the problem under study because it provides a simple and natural way to isolate the effect of an anticipated price change on the size of the exploited stock at the firm level.…”

Section: Introductionmentioning

confidence: 99%

Non-Renewable Resource Supply: Substitution Effect, Compensation Effect, and All That

Daubanes

Lasserre

2012

SSRN Journal

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CIRANOLe CIRANO est un organisme sans but lucratif constitué en vertu de la Loi des compagnies du Québec. Le Résumé / AbstractThe interaction of supply and demand is at the root of market and other equilibria. Yet no systematic synthetic treatment of non-renewable resource supply exists; equilibrium analyses or welfare statements usually are formulated without any systematic decomposition into supply and demand. In this note, we examine the supply decision of individual non-renewable resource suppliers facing given prices. We establish instantaneous restricted (fixed reserves, treated as capital) and unrestricted supply functions. We decompose the effect of a price change into an intertemporal substitution effect and a stock compensation effect. The later arises when the stock of reserves to be extracted is endogenous. We show that the substitution effect always dominates so that a price increase at some date always causes supply to decrease at all other dates. Thus, despite the formal resemblance of resource supply over the time space with demand over the spectrum of goods, there is no such thing as a possible complementarity between resources extracted at different dates. Yet, as this theory of non-renewable resource supply makes clear, this is what researchers seeking exceptions to the green paradox are trying to identify. Nor is there any peculiarity similar to the Giffen paradox or to the inferior good paradox in resource supply. Besides unifying the treatment of conventional good supply and nonrenewable resource supply, this theoretical exercise also shows how to avoid supply aggregation problems that make several existing results or modeling approaches questionable. The properties, first established within a parsimonious model, are shown to hold in a very general setup.

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Global Competition and Environmental Regulation: Is the ‘Race to the Bottom’ Inevitable?

Clark¹

1995

Markets, the State and the Environment

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On comparing monopoly and competition in exhaustible resource exploitation

Cited by 48 publications

References 2 publications

Limit pricing and the (in)effectiveness of the carbon tax

Limit pricing and the (in)effectiveness of the carbon tax

Non-Renewable Resource Supply: Substitution Effect, Compensation Effect, and All That

Global Competition and Environmental Regulation: Is the ‘Race to the Bottom’ Inevitable?

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