Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Tuesday, November 22, 2011

Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly

Posted by D. Daniel Sokol

Kenji Fujiwara (Kwansei Gakuin University) and Ngo Van Long (McGill University) discuss Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly.

ABSTRACT: Formulating a dynamic game model of a world exhaustible resource market, this paper studies welfare implications of Stackelberg leaderships for an individual country and the world. We overcome the problem of time-inconsistency by imposing a credibility condition" on the Markovian strategy of the Stackelberg leader. Under this condition, we show that the presence of a global Stackelberg leader leaves the follower worse o relative to the Nash equilibrium. Moreover, the world welfare is highest in the Nash equilibrium as compared with the two Stackelberg equilibria.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/11/welfare-implications-of-leadership-in-a-resource-market-under-bilateral-monopoly.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef0154362b1db1970c

Listed below are links to weblogs that reference Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly:

Comments

Post a comment