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Cartel Extraction and Backstop Entry

Published online by Cambridge University Press:  17 August 2016

François Melese
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Extract

Clearly there remain number of problems in the field of energy today. Of particular relevance is the role of substitutes and/or backstop technologies (see Nordhaus (1973)) in affecting the extraction decisions of monopolistic producers of (scarce) exhaustible resources.

Research and development is currently underway in most industrialized countries with the objective of producing alternatives to conventional energy inputs. Two principle motivating factors appear to be stimulating R & D in nations which import a significant share of their resource requirements for energy production. The first involves the inherent scarcity of these inputs which, unlike other capital assets, are nonrenewable. The second factor (which is augmented by the first) concerns the strategic or « essential » (see Dasgupta & Heal (1979)) nature of exhaustible resources in production. Such inputs often lie concentrated in the hands of a few potentially unstable regimes which for either political or strategic reasons makes continued dependance on these resources undesirable.

Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 46 , Issue 3 , September 1980 , pp. 255 - 266
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1980 

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Footnotes

*

IRES, University of Louvain.

I am indebted to Ph. Michel for his valuable suggestions and also to P. Dasgupta, L. Phlips, and R. Schmalensee for helpful comments on an earlier draft. The usual disclaimers apply. Research support from the FRFC is gratefully acknowledged.

References

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