Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/105104
Authors: 
Gerlagh, Reyer
Liski, Matti
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5050
Abstract: 
We consider a model of cake-eating with private information. The model captures phenomena such as trust and security of supply in resource-use relationships. It also predicts supply shocks as an equilibrium phenomenon: privately informed sellers have incentives to reveal resource scarcity too late, through a supply disruption, after which they exploit the consumers' inability to immediately adjust demand. Two puzzles that a standard exhaustible-resource theory cannot explain are resolved: sellers have an incentive to overstate their resources rather than emphasize scarcity, and consumers can switch to alternatives before exhausting the resource thereby leaving socially valuable resource in the ground.
Subjects: 
exhaustible resources
asymmetric information
resource dependence
JEL: 
D40
D90
O33
Q40
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.