Forward trading in exhaustible-resource oligopoly
نویسندگان
چکیده
We analyze oligopolistic exhaustible-resource depletion when firms can trade forward contracts on deliveries, a market structure prevalent in most resource commodity markets. When market interactions become arbitrarily frequent, all stocks are contracted and subgame-perfect equilibrium allocation becomes perfectly competitive. The result is in contrast with the idea that forward markets can help firms to commit to a pre-determined production plan in a dynamic game. As the resource stock is an intertemporal capacity constraint, the result sheds light on the role of capacity constraints in forward markets. (JEL classification: G13, L12, L13, L50).
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