IDEAS home Printed from https://ideas.repec.org/a/bla/manchs/v77y2009i5p632-649.html
   My bibliography  Save this article

On The Path Of An Oil Pigovian Tax

Author

Listed:
  • ANTOINE BELGODERE

Abstract

This paper studies optimal climate policy in the presence of oil rents. Several authors have found that, according to Hotelling's rule, in the long run, the optimal ad valorem tax must decrease. However, if the pollution is a stock and if environmental concerns impose stopping the resource extraction before its exhaustion, we show that an ad valorem tax defined over the rent cannot decentralize the optimum. In this case, an increasing per‐unit tax can decentralize the optimum. Such a tax implies the disappearance of the Hotelling rent. Thus, the extraction problem reduces to a pollution‐control problem.

Suggested Citation

  • Antoine Belgodere, 2009. "On The Path Of An Oil Pigovian Tax," Manchester School, University of Manchester, vol. 77(5), pages 632-649, September.
  • Handle: RePEc:bla:manchs:v:77:y:2009:i:5:p:632-649
    DOI: 10.1111/j.1467-9957.2009.02115.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9957.2009.02115.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1467-9957.2009.02115.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Forster, Bruce A., 1980. "Optimal energy use in a polluted environment," Journal of Environmental Economics and Management, Elsevier, vol. 7(4), pages 321-333, December.
    2. Amundsen, Eirik S. & Schob, Ronnie, 1999. "Environmental taxes on exhaustible resources," European Journal of Political Economy, Elsevier, vol. 15(2), pages 311-329, June.
    3. Chermak, Janie M. & Patrick, Robert H., 2002. "Comparing tests of the theory of exhaustible resources," Resource and Energy Economics, Elsevier, vol. 24(4), pages 301-325, November.
    4. Geoffrey Heal, 1976. "The Relationship Between Price and Extraction Cost for a Resource with a Backstop Technology," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 371-378, Autumn.
    5. Berck, Peter & Roberts, Michael, 1996. "Natural Resource Prices: Will They Ever Turn Up?," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 65-78, July.
    6. Sinclair, Peter J N, 1992. "High Does Nothing and Rising Is Worse: Carbon Taxes Should Keep Declining to Cut Harmful Emissions," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(1), pages 41-52, March.
    7. Grimaud, Andre & Rouge, Luc, 2005. "Polluting non-renewable resources, innovation and growth: welfare and environmental policy," Resource and Energy Economics, Elsevier, vol. 27(2), pages 109-129, June.
    8. Krautkraemer, Jeffrey A., 1986. "Optimal depletion with resource amenities and a backstop technology," Resources and Energy, Elsevier, vol. 8(2), pages 133-149, June.
    9. Farzin, Y H & Tahvonen, O, 1996. "Global Carbon Cycle and the Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 515-536, October.
    10. Poul Schou, 2002. "When Environmental Policy is Superfluous: Growth and Polluting Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 605-620, December.
    11. Schultz, Peter A & Kasting, James F, 1997. "Optimal reductions in CO2 emissions," Energy Policy, Elsevier, vol. 25(5), pages 491-500, April.
    12. Noel, Michael, 1978. "Resource extraction and recycling with environmental costs," Journal of Environmental Economics and Management, Elsevier, vol. 5(3), pages 220-235, September.
    13. Sinclair, P.J.N., 1994. "On the Optimum Trend of Fossil Fuel Taxation," Discussion Papers 94-16, Department of Economics, University of Birmingham.
    14. Forster, Bruce A., 1975. "Optimal pollution control with a nonconstant exponential rate of decay," Journal of Environmental Economics and Management, Elsevier, vol. 2(1), pages 1-6, September.
    15. Schulze, William D., 1974. "The optimal use of non-renewable resources: The theory of extraction," Journal of Environmental Economics and Management, Elsevier, vol. 1(1), pages 53-73, May.
    16. Sinclair, Peter J N, 1994. "On the Optimum Trend of Fossil Fuel Taxation," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 869-877, Supplemen.
    17. Withagen, Cees, 1994. "Pollution and exhaustibility of fossil fuels," Resource and Energy Economics, Elsevier, vol. 16(3), pages 235-242, August.
    18. BERLINSCHI Ruxanda & DAUBANES Julien, 2007. "Aid to Poor Resource Exporting Countries : Which Role Should be Played by Resource Taxation?," LERNA Working Papers 07.23.244, LERNA, University of Toulouse.
    19. Toman, Michael A. & Withagen, Cees, 2000. "Accumulative pollution, "clean technology," and policy design," Resource and Energy Economics, Elsevier, vol. 22(4), pages 367-384, October.
    20. Jeffrey A. Krautkraemer, 1985. "Optimal Growth, Resource Amenities and the Preservation of Natural Environments," Review of Economic Studies, Oxford University Press, vol. 52(1), pages 153-169.
    21. Schou, Poul, 2002. " When Environmental Policy Is Superfluous: Growth and Polluting Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 605-620, December.
    22. Olli Tahvonen, 1997. "Fossil Fuels, Stock Externalities, and Backstop Technology," Canadian Journal of Economics, Canadian Economics Association, vol. 30(4), pages 855-874, November.
    23. Ulph, Alistair & Ulph, David, 1994. "The Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 857-868, Supplemen.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. VARDAR, N. Baris, 2014. "Optimal energy transition and taxation of non-renewable resources," LIDAM Discussion Papers CORE 2014021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Julien Daubanes & André Grimaud, 2010. "Taxation of a Polluting Non-renewable Resource in the Heterogeneous World," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(4), pages 567-588, December.
    3. Calvo, Jorge Andrés Perdomo & Pérez, Ana María Jaramillo, 2016. "Optimal extraction policy when the environmental and social costs of the opencast coal mining activity are internalized: Mining District of the Department of El Cesar (Colombia) case study," Energy Economics, Elsevier, vol. 59(C), pages 159-166.
    4. Tomoyuki Sakamoto & Shunsuke Managi, 2016. "Optimal economic growth and energy policy: analysis of nonrenewable and renewable energy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(1), pages 1-19, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Beermann, 2015. "Climate Policy and the Intertemporal Supply of Fossil Resources," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 62.
    2. Grimaud, André & Magné, Bertrand & Rougé, Luc, 2008. "Carbon Storage in a Growth Model with Climate and R&D Policy," IDEI Working Papers 536, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. VARDAR, N. Baris, 2014. "Optimal energy transition and taxation of non-renewable resources," LIDAM Discussion Papers CORE 2014021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. DAUBANES Julien & GRIMAUD André, 2006. "On the North-South Effects of Environmental Policy: Rent Transfers, Relocation and Growth," LERNA Working Papers 06.26.219, LERNA, University of Toulouse.
    5. van der Werf, Edwin & Di Maria, Corrado, 2012. "Imperfect Environmental Policy and Polluting Emissions: The Green Paradox and Beyond," International Review of Environmental and Resource Economics, now publishers, vol. 6(2), pages 153-194, March.
    6. Grimaud, André & Rouge, Luc, 2014. "Carbon sequestration, economic policies and growth," Resource and Energy Economics, Elsevier, vol. 36(2), pages 307-331.
    7. van der Ploeg, Frederick & Withagen, Cees, 2012. "Is there really a green paradox?," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 342-363.
    8. Belgodere, Antoine, 2007. "Ressource non renouvelable polluante : décentralisation de l'optimum en présence d'un pouvoir de marché [Polluting nonrenewable resources: decentralization of the optimum in the presence of market ," MPRA Paper 28278, University Library of Munich, Germany.
    9. Sandal, Leif K. & Steinshamn, Stein Ivar & Grafton, R. Quentin, 2003. ""More is less": the tax effects of ignoring flow externalities," Resource and Energy Economics, Elsevier, vol. 25(3), pages 239-254, August.
    10. André Grimaud & Luc Rouge, 2009. "Séquestration du carbone et politique climatique optimale," Économie et Prévision, Programme National Persée, vol. 190(4), pages 53-69.
    11. Luise Röpke, 2015. "Essays on the Integration of New Energy Sources into Existing Energy Systems," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 58.
    12. Julien Daubanes & André Grimaud, 2010. "Taxation of a Polluting Non-renewable Resource in the Heterogeneous World," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(4), pages 567-588, December.
    13. Prieur, Fabien & Tidball, Mabel & Withagen, Cees, 2013. "Optimal emission-extraction policy in a world of scarcity and irreversibility," Resource and Energy Economics, Elsevier, vol. 35(4), pages 637-658.
    14. Chakravorty, Ujjayant & Magné, Bertrand & Moreaux, Michel, 2008. "A dynamic model of food and clean energy," Journal of Economic Dynamics and Control, Elsevier, vol. 32(4), pages 1181-1203, April.
    15. Grimaud, André & Magné, Bertrand & Rougé, Luc, 2009. "Polluting Non-Renewable Resources, Carbon Abatement and Climate Policy in a Romer Growth Model," TSE Working Papers 09-023, Toulouse School of Economics (TSE).
    16. van der Ploeg, Frederick & Withagen, Cees, 2012. "Too much coal, too little oil," Journal of Public Economics, Elsevier, vol. 96(1), pages 62-77.
    17. Corrado Di Maria & Sjak Smulders & Edwin Werf, 2017. "Climate Policy with Tied Hands: Optimal Resource Taxation Under Implementation Lags," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(3), pages 537-551, March.
    18. Groth, Christian & Schou, Poul, 2007. "Growth and non-renewable resources: The different roles of capital and resource taxes," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 80-98, January.
    19. Amigues, Jean-Pierre & Moreaux, Michel, 2013. "The atmospheric carbon resilience problem: A theoretical analysis," Resource and Energy Economics, Elsevier, vol. 35(4), pages 618-636.
    20. Hoel, Michael & Jensen, Svenn, 2012. "Cutting costs of catching carbon—Intertemporal effects under imperfect climate policy," Resource and Energy Economics, Elsevier, vol. 34(4), pages 680-695.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:77:y:2009:i:5:p:632-649. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/semanuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.