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Competition in Markets for Depletable Resources with Setup Costs

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Abstract

This paper analyzes the impact on exhaustible resource markets of setup costs, a sparsely analyzed category of nonconvex production technologies. This paper proves that, even under idealized circumstances for competition, a competitive equilibrium will fail to exist in the presence of setup costs, for any utility and cost functions such that a planner would exploit exhaustible resource pools sequentially.

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Authors and Affiliations

  1. Resources for the Future, 1616 P St. NW, Washington, DC, 20036, USA

    Carolyn Fischer

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  1. Carolyn Fischer
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Correspondence to Carolyn Fischer.

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JEL classifications: Q3, C62

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Fischer, C. Competition in Markets for Depletable Resources with Setup Costs. Environ Resource Econ 30, 243–257 (2005). https://doi.org/10.1007/s10640-004-1516-1

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  • DOI: https://doi.org/10.1007/s10640-004-1516-1

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