Exhaustible Resources and Alternative Equilibrium Concepts

We compare the open loop and feedback Nash equilibria that obtain in oligopolistic resource markets when the resource is exhaustible and privately owned. When the resource is common property, the two equilibrium concepts are known to yield significantly different results. Under the regime of private property, the choice of equilibrium concept does not appear to be as important. Restricting our attention to the cases of iso-elastic demand (and zero extraction costs) and linear demand (and quadratic extraction costs) we identify instances where the open loop and feedback Nash equilibria coincide and demonstrate that in other cases the two equilibria do not differ significantly.