Volume 21, Issue 1 (Spring 2016)                   JPBUD 2016, 21(1): 105-122 | Back to browse issues page

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Fadaee M, Motaffef M. (2016). Strategic Interactions between a Fossil Fuel Cartel and a Coalition of Buyers:a Dynamic Approach. JPBUD. 21(1), 105-122.
URL: http://jpbud.ir/article-1-1355-en.html
1- Department of Economics, Institute for Management and Planning Studies, Tehran, Iran , m.fadaee@imps.ac.ir
2- Institute for Management and Planning Studies, Tehran, Iran
Abstract:   (4922 Views)

In this paper, we study the environmental consequences of fossil fuel extraction. In our model, there is a cartel of fossil fuel suppliers and a coalition of fossil fuel buyers. The cartel maximizes her profits without taking into account the negative environmental externalities of her productions. However, since consumers are suffered by environmental emissions of fossil fuels, the coalition implements strategies to reduce emissions which in turn decline the fossil fuel consumption. In such a setting, there is a conflict of interests; therefore, the cartel and the coalition play a simultaneous strategic game to maximize their objective functions. An important result of the game is the existence of two different steady states. One with the resource exhausted and the other with positive reserves significantly far from zero.

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Type of Study: Research |
Received: Jun 14 2016 | Accepted: Feb 26 2017 | ePublished: Feb 26 2017

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