Abstract
Microeconomic studies of exhaustible resources have usually been restricted to the cases of monopoly and perfect competition. In these cases, however, strategic interactions between economic agents are ignored. Here the authors present a game- theoretic analysis of just these interactions in oligopolistic oil markets. Much less restrictive assumptions are made than in previous game-theoretic analyses: agents make decisions in each period on the basis of previous decisions by other agents. Two models are presented and their solutions and economic implications are discussed. In the first model, producers sell to final demand, in the second a producers' cartel sells to oil traders.
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