Journal
JOURNAL OF ECONOMIC THEORY
Volume 138, Issue 1, Pages 237-261Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.jet.2006.10.012
Keywords
productive asset; oligopoly; dynamic games
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We build a subgame perfect Nash equilibrium of a common property productive asset oligopoly and analyze separately the impact of a change in the implicit growth rate of the asset and a change in the number of firms exploiting the asset. We show that the steady state level of asset can be a decreasing function of the asset's implicit growth rate. This phenomenon arises when the initial stock of asset is below a certain threshold. In the short-run we show that firms' exploitation rate can be a decreasing function of the implicit growth rate. We study the impact of a change in the number of firms that share access to the asset. Reducing the number of firms can result, in the long-run, in higher industry production. In the short-run, it can result in an increase of the industry's exploitation and a decrease of the level of the asset's stock. (C) 2007 Elsevier Inc. All rights reserved.
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