On the impact of cross-ownership in a common property renewable resource oligopoly * - INRAE - Institut national de recherche pour l’agriculture, l’alimentation et l’environnement Access content directly
Preprints, Working Papers, ... Year : 2024

On the impact of cross-ownership in a common property renewable resource oligopoly *

Abstract

This paper examines a dynamic game of exploitation of a productive asset by agents who subsequently sell the outcomes of their endeavours in an oligopolistic market where a subset of the oligopolists owns a share in each other’s profits. A Markov Perfect Nash Equilibrium of the game is constructed and used to analyze the impact of cross-ownership on the equilibrium production strategies, the steady state resource stocks, the profitability of cross-ownership, and social welfare. We show that there exists an interval of resource stocks for which a symmetric cross-ownership can be profitable, even though such rival cross-shareholdings are unprofitable in the corresponding static equilibrium framework. Moreover, we demonstrate that cross-ownership may not only lead to a higher market output and social welfare in the short run, but also a higher steady-state stock, industry production, and social welfare in the long run. Thus, antitrust authorities should be cautious in ruling in the renewable resource industries.
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Dates and versions

hal-04573659 , version 1 (13-05-2024)

Identifiers

  • HAL Id : hal-04573659 , version 1

Cite

Miao Dai, Hassan Benchekroun, Ilyass Dahmouni. On the impact of cross-ownership in a common property renewable resource oligopoly *. 2024. ⟨hal-04573659⟩
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