Oligopoly Extraction of a Nonrenewable Common Property Resource: The Importance of the Period of Commitment in Dynamic Games

This paper is concerned with oligopolistic extraction of a deposit of a nonrenewable resource which is common property. A simple model of a resource market is presented and Nash equilibria are computed. The model is one which has been of particular interest in the early literature on competitive versus monopolistic exploitation. This paper extends the analysis of this model to intermediate market structures. Any analysis of a noncooperative dynamic game must involve specification of the appropriate strategy space. Thus this paper is also concerned with the question: what are appropriate strategies for the analysis of noncooperative resource extraction?