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Resource extraction and production of a substitute

By Martin Schäfer


AbstractThis paper deals with the problem of how to supply an exhaustible resource which is available by extraction or by recycling. Two decision makers are assumed to control either extraction or recycling. Hence, there is a duopolistic market. This market is modelled by nonzero-sum differential games. The solution concepts chosen are the open-loop Nash and Stackelberg equilibria, the latter ones subsequently with both players as leader or follower, respectively. The open loop concept is chosen although the equilibria do not need to be subgame prefect. However, they give some insight into short-term planning strategies and can be easily compared with analogous models due to this topic. A wide range of literature about extraction and/or consumption of exhaustible resources is related to methods of Optimal Control Theory with open-loop controls

Publisher: Published by Elsevier Ltd.
Year: 1992
DOI identifier: 10.1016/0898-1221(92)90198-Q
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