Note on the open-loop Von Stackelberg equilibrium in the cartel versus fringe model

Article Abstract:

The study demonstrates the error of a previous derivation of the open-loop van Stackelberg equilibrium in the cartel versus fringe model of the oil market. Corrections in the derivation result in true price trajectories with one or two discontinuities. The results also demonstrated qualitative and quantitative equilibrium trajectories that are different from the previous estimation. However, the main conclusion of the previous study that the open-loop von Stackelberg equilibrium is not dynamically consistent is still maintained in the present study despite variations in the derivation.

Petroleum and Petroleum Products

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The open-loop Von Stackelberg equilibrium in the cartel versus fringe model: a reply

Article Abstract:

The failure of the application of the standard arbitrage on the open-loop von Stackelberg equilibrium in the cartel versus fringe model is discussed. The reason for this inapplicability is blamed on the unwillingness of the leader supplier and its smaller competitors to arbitrage during downward price discontinuity. The study concludes that arbitrage influences prices in exhaustible resource markets, but its effectivity is reduced when the market switches between several suppliers.

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Strong time-consistency in the cartel-versus-fringe model

Article Abstract:

A strong time consistent resolution to the cartel-versus-fringe model for nonrenewable resources markets is provided.

Tests, problems and exercises, Measurement, Supply-side economics, Nonrenewable natural resources, Nonrenewable resources

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