On price taking behavior in a nonrenewable resource cartel-fringe game

Working paper

We consider a nonrenewable resource game with one cartel and a set of fringe members. We show that (i) the outcomes of the closed-loop and the open-loop nonrenewable resource game with the fringe members as price takers (the cartel fringe game à la Salant 1976) coincide and (ii) when the number of fringe firms becomes arbitrarily large, the equilibrium outcome of the closed-loop Nash game does not coincide with the equilibrium outcome of the closed-loop cartel-fringe game. Thus, the outc...

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Authors: Benchekroun, H; Withagen, C

• Publication status: Published
• Publisher: University of Oxford Publisher's website
• Series: OxCarre Papers
• Publication date: 2011-12-06
• Paper number: 80
• Keywords: dominant rm versus fringe; nonrenewable resources; open-loop versus closed-loop strategies; cartel-fringe; dynamic games; price taking