A generalized Nash equilibrium model of a resource stockpile with independent market response dynamics

Abstract

Closely related to inventory control problems and Nash-Cournot games, research into the optimal build-up and depletion of strategic resource stockpiles is of critical interest to governments and private industry. Enhancing previously reported SISO models of strategic resource stockpiles, this paper reports three innovations in game theoretic optimal stockpile modeling that differentiate it from previous publications: the combination of a stockpile model in parallel with an independent, open market inventory model, the addition of a producer's extraction cost, and the consideration of initial stockpile build-up costs. The following sections introduce this new model, offer a solution existence proof, and present example solutions and comparative numerical analyses.