Horizontal agreements about the use of a natural resource

Van Moer, Geert (2022): Horizontal agreements about the use of a natural resource.

Abstract

I analyze horizontal agreements about the use of a natural resource. I consider a Cournot duopoly where production depends on two inputs, a natural resource and a basket of other resources, according to a production technology with constant returns to scale. I compare three regimes. (1) The competitive benchmark is defined such that firms operate with the cost-minimizing input combination. (2) A joint absolute usage target lowers the absolute usage of the natural resource. It also lowers the usage in relative terms, per unit of production, except with a fixed-proportions production technology. (3) A joint relative usage target mimics the competitive benchmark.

• Item Type: MPRA Paper
• Language: English
• Keywords: Horizontal Agreements; Natural Resources
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L4 - Antitrust Issues and Policies > L41 - Monopolization ; Horizontal Anticompetitive Practices; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General > Q01 - Sustainable Development; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q3 - Nonrenewable Resources and Conservation > Q38 - Government Policy

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