Abstract
Noncooperative intertemporal equilibrium in an exhaustible-resource market where firms' extraction costs are u-shaped is analyzed under the hypotheses of contestability theory. If there are two or more firms, each with an identical deposit, then limitations on the total resource stock imply strategic interaction even where there is perfect contestability. These results raise questions about the robustness of properties claimed for contestable markets, as well as about the realism of expecting that equilibrium may be established in this type of market. Copyright 1991 by The editors of the Scandinavian Journal of Economics.
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