The Irreversible Output Effects of Severance Taxes on Oil
This article explains why the output effect of a severance tax on oil is not generally reversed when the tax is removed. It is shown that this severance-tax-induced irreversibility in supply has important implications for both the interpretation and estimation of the supply of oil. Specifically, severance taxes cause a path dependence in supply that makes the concept of a supply curve for oil ambiguous. The authors provide estimates for the case of Kansas that indicate that the magnitude of the irreversible effects of severance taxes is large.
Year of publication: |
1999
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Authors: | Brandly, Mark ; Barnett, A. H. |
Published in: |
Public Finance Review. - Vol. 27.1999, 5, p. 511-530
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Saved in:
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