Set-Up Cost and Mineral Oligopolists

摘要

In extractive industries, production usually involves high set-up costs which make the perfectly competitive outcome unlikely. However, such set-up costs do not seem to have received attention in the literature. This paper shows that with set-up costs, there are many equilibria in an oligopolistic market structure. Firms that are ex ante identical may choose optimally to be heterogeneous. Therefore, equilibria may involve heterogeneous behavior and performance.