On the Profitability of Production Constraints in a Dynamic Natural Resource Oligopoly
Series/Report no.Cahier de recherche #9717
Static oligopoly analysis predicts that if a single firm in Cournot equilibrium were to be constrained to contract its production marginally, its profits would fall. on the other hand, if all the firms were simultaneously constrained to reduce their productino, thus moving the industry towards monopoly output, each firm's profit would rise. We show that these very intuitive results may not hold in a dynamic oligopoly.
BENCHEKROUN, Hassan et GAUDET, Gérard, «On the Profitability of Production Constraints in a Dynamic Natural Resource Oligopoly», Cahier de recherche #9717, Département de sciences économiques, Université de Montréal, 1997, 20 pages.