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Strong Time-Consistency in the Cartel-versus-Fringe Model
Groot,A.M. Withagen,C.A.A.M. de Zeeuw,A.J.
Groot,A.M.
Withagen,C.A.A.M.
de Zeeuw,A.J.
Abstract
In the seventies and eighties, the theory of exhaustible natural resources developed a branch, which was called the cartel-versus-fringe model, to characterize markets with one large coherent cartel and a big number of small suppliers named the fringe.It was considered appropriate to use the von Stackelberg solution concept but because solutions could only be derived in an open-loop framework time-inconsistency resulted.This paper solves time-inconsistency in the cartel-versus-fringe model and provides the feedback von Stackelberg equilibrium for all cost configurations.
Description
Pagination: 32
Date
1996
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Publisher
Microeconomics
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22.pdf
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Keywords
natural resources, cartels, game theory, consistency
Citation
Groot, A M, Withagen, C A A M & de Zeeuw, A J 1996 'Strong Time-Consistency in the Cartel-versus-Fringe Model' CentER Discussion Paper, vol. 1996-22, Microeconomics, Tilburg.