Oligopoly exploitation of a private property productive asset

In this paper, we build a Closed-Loop Nash Equilibrium of a private property productive asset oligopoly. We compare and contrast private with common property in terms of exploitation rates and social welfare, and provide a comparative dynamic analysis with respect to the number of firms in the industry. Contrary to previous studies on oligopolistic exploitation of productive assets, before exploitation begins, the resource is parcelled out: each firm privately owns and manages the assigned parcel over the entire planning horizon. Compared with the common property regime, we find a new set of results, both in the shortand in the long-run. As for social welfare, we provide conditions on the implicit growth rate and the initial asset stock under which the socially optimal allocation of the resource implies a natural monopoly. & 2012 Elsevier B.V. All rights reserved.