Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191283
Authors: 
Curuk, Malik
Sen, Suphi
Year of Publication: 
2018
Series/Report no.: 
ifo Working Paper No. 278
Abstract: 
We develop a resource extraction model that features imperfect substitution and endogenous market power. We analytically characterize the effect of anticipated future demand shocks on the resource extraction path and show that endogenous market power can dampen the adverse consequences of climate policies due to intertemporal carbon leakages compared to the perfect or monopolistic competition benchmarks. Next, we show that under constant elasticity of substitution between alternative energy resources, resource owner's current market share and reserves-to-extraction ratio are sufficient statistics to calculate the degree of intertemporal leakage. Applying data on OPEC, we find a minor increase in current extraction due to an anticipated increase in the productivity of alternative energy technologies.
Subjects: 
Climate policy
variable markups
nonrenewable energy resources
imperfect competition
imperfect substitution
JEL: 
Q35
Q48
L10
H23
Document Type: 
Working Paper

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