Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/307789 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
Helsinki GSE Discussion Papers No. 8
Publisher: 
Helsinki Graduate School of Economics, Helsinki
Abstract: 
This paper studies sustainability agreements between competitors about their use of a natural resource. A symmetric Cournot duopoly model reveals the main effects. Two types of agreements are considered, specifying (1) the absolute usage of the natural resource per firm and (2) the relative usage of the natural resource, per unit of production. Whenever an agreement induces substitution towards other resources, production quantities decline. An agreement about the relative usage of the natural resource is ineffective unless returns to scale are decreasing. I argue that returns to scale are decreasing particularly in the short run after an agreement is made.
Subjects: 
sustainability agreements
natural resources
JEL: 
L13
L41
Q01
Q38
ISBN: 
978-952-7543-07-8
Document Type: 
Working Paper

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