Optimal taxation of a monopolistic extractor: Are subsidies necessary?
This note reconsiders the optimal taxation problem when extraction of an exhaustible resource is monopolistic. In a standard model, I explicitly characterize and examine all the efficiency-inducing paths of taxes/subsidies on the resource. Consistently with the literature, there is a family of such optimal paths. In contrast with Im (2002), it may not be necessary to subsidize the monopoly at any date: within the family of optimal paths of taxes/subsidies, there may exist some paths along which the regulator raises positive revenues at all dates. This illustrates how the static trade-off between inducing efficiency and raising tax revenues in the presence of market power is relaxed under exhaustibility.
Year of publication: |
2011
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Authors: | Daubanes, Julien |
Published in: |
Energy Economics. - Elsevier, ISSN 0140-9883. - Vol. 33.2011, 3, p. 399-403
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Publisher: |
Elsevier |
Keywords: | Exhaustible resources Optimal taxation Imperfect competition |
Saved in:
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