On equilibrium in resource markets with scale economies and stochastic prices
Autor: | Charles F. Mason |
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Rok vydání: | 2020 |
Předmět: |
TheoryofComputation_MISCELLANEOUS
Economics and Econometrics Credence Management Monitoring Policy and Law jel:Q2 Competitive equilibrium Economies of scale Variety (cybernetics) Microeconomics Resource (project management) Resource Economics Stochastic Dynamic Optimization jel:L15 Market price Economics Production (economics) Empirical evidence jel:D8 |
Popis: | In this paper, I show the existence and the characteristics of equilibrium in a non-renewable resource market where extraction costs are non-convex and market price is subject to stochastic shocks, an empirically relevant setting. In my model firms may be motivated to hold inventories to facilitate production smoothing, which allows them to continue producing at a smooth pace at any instant when extraction ceases, e.g. when reserves are exhausted. This aspect of the model then supports a competitive equilibrium in the presence of non-convex costs. Casual empirical evidence is provided that supports the central features of my model for a variety of non-renewable resources, lending credence to the explanation for equilibrium I propose. |
Databáze: | OpenAIRE |
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