Open AccessMONOPOLY, POTENTIAL COMPETITION AND PRIVATE STOCK INFORMATION IN EXHAUSTIBLE RESOURCE MARKETS
Author(s) -
AGEE MARK D.
Publication year - 2000
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.2000.tb00042.x
Subject(s) - monopoly , stock (firearms) , economics , private information retrieval , microeconomics , competition (biology) , welfare , free entry , industrial organization , business , market economy , mechanical engineering , ecology , statistics , mathematics , engineering , biology
. This paper develops an exhaustible resource model with an incumbent monopolist that faces future potential entry of a single rival or backstop technology. The model is characterized by private stock information in the sense that firms do not know with certainty the size and/or quality of their rival's reserve stock. Results indicate that if such information is private, the strategic response of the monopolist to an entry threat is to extract reserves in the pre‐entry era at a rate faster than would a pure monopolist in an uncontested market, and thus could lead to an improvement in economic welfare relative to the situation where entry is restricted.