Externalities, Market Power and Resource Extraction

Arizona State University Working Paper 97/12

24 Pages Posted: 23 Jan 1998

See all articles by Manjira Datta

Manjira Datta

Arizona State University - Department of Economics

Leonard J. Mirman

University of Virginia - Department of Economics

Date Written: August 1997

Abstract

This paper analyzes the effect of market power in a model with dynamic and biological externalities. When several countries harvest fish in international waters the evolution of fish population is affected by their joint action, thus, generating a biological and a dynamic externality. If there is trade in fish, the market-clearing prices depend on the harvesting and consumption decision made in every country. Therefore, market-clearing prices generate another type of interdependence. The planners make their policy decision by taking account of various externalities. We find a subgame perfect Cournot-Nash equilibrium and the conditions under which it may be efficient. We also study the role of different externalities in generating inefficiency.

JEL Classification: C72, D90, Q22

Suggested Citation

Datta, Manjira and Mirman, Leonard J., Externalities, Market Power and Resource Extraction (August 1997). Arizona State University Working Paper 97/12, Available at SSRN: https://ssrn.com/abstract=54867 or http://dx.doi.org/10.2139/ssrn.54867

Manjira Datta (Contact Author)

Arizona State University - Department of Economics ( email )

W.P. Carey School of Business
Arizona State University, Box 873806
Tempe, AZ 85287-3806
United States
480-965-6433 (Phone)
480-965-0748 (Fax)

Leonard J. Mirman

University of Virginia - Department of Economics ( email )

1818 Winston Rd
Charlottesville, VA
United States

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