Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55350
Authors: 
Fujiwara, Kenji
Long, Ngo Van
Year of Publication: 
2012
Series/Report no.: 
CESifo working paper: Resources and Environment Economics 3721
Abstract: 
We formulate a dynamic game model of trade in an exhaustible resource with a quantity-setting cartel. We compute the feedback Nash equilibrium and two Stackelberg equilibria under two different leadership scenarios: leadership by the strategic importing country, and leadership by the exporting cartel. We numerically show that as compared to the Nash equilibrium, both players are better off if the importing country is the leader. The follower is worse off if the exporting cartel is the leader. Among the three game-theoretic outcomes, the world welfare is highest under the importing country's leadership and lowest under the exporting country's leadership.
Subjects: 
dynamic game
exhaustible resource
Stackelberg leadership
optimal tariff
JEL: 
C73
L72
Q34
F18
Document Type: 
Working Paper

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