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Dynamically Consistent Oil Import Tariffs

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  • Larry Karp
  • David M. Newbery

Abstract

The standard solution of the open-loop optimal import tariff is normally time inconsistent. This paper shows why and derives the dynamically consistent Markov perfect tariff. The two tariffs are compared; they differ except for a special class of import demands. The time paths of tariffs and the welfare cost of an inability to commit are calculated for a dominant importer. The welfare costs of the inability to commit are small if its market share is below one-half.

Suggested Citation

  • Larry Karp & David M. Newbery, 1992. "Dynamically Consistent Oil Import Tariffs," Canadian Journal of Economics, Canadian Economics Association, vol. 25(1), pages 1-21, February.
    • Handle: RePEc:cje:issued:v:25:y:1992:i:1:p:1-21
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    Citations

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    Cited by:

    1. Rubio, Santiago J. & Escriche, Luisa, 2001. "Strategic pigouvian taxation, stock externalities and polluting non-renewable resources," Journal of Public Economics, Elsevier, vol. 79(2), pages 297-313, February.
    2. Santiago J. Rubio, 2004. "On Capturing Oil Rents with a National Excise Tax Revisited," Working Papers 2004.133, Fondazione Eni Enrico Mattei.
    3. Colombo, Luca & Labrecciosa, Paola, 2019. "Stackelberg versus Cournot: A differential game approach," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 239-261.
    4. Jean-Philippe Gervais, 2001. "Production uncertainty and trade policy commitment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(1), pages 1-21.
    5. Kenji Fujiwara & Ngo Long, 2011. "Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly," Dynamic Games and Applications, Springer, vol. 1(4), pages 479-497, December.
    6. 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.
    7. Keutiben, Octave, 2014. "On capturing foreign oil rents," Resource and Energy Economics, Elsevier, vol. 36(2), pages 542-555.
    8. Morita, Tamaki & Higashida, Keisaku & Takarada, Yasuhiro & Managi, Shunsuke, 2018. "Does acquisition of mineral resources by firms in resource-importing countries reduce resource prices?," Resources Policy, Elsevier, vol. 58(C), pages 97-110.
    9. Santiago J. Rubio, 2005. "Tariff Agreements And Non-Renewable Resource International Monopolies: Prices Versus Quantitites," Working Papers. Serie AD 2005-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    10. Lorenczik, Stefan & Malischek, Raimund & Trüby, Johannes, 2017. "Modeling strategic investment decisions in spatial markets," European Journal of Operational Research, Elsevier, vol. 256(2), pages 605-618.
    11. Gérard Gaudet, 2007. "Natural resource economics under the rule of Hotelling," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1033-1059, November.
    12. Gregory Goering & Michael Pippenger, 2003. "Dynamic consistency and monopoly," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 31(2), pages 188-194, June.
    13. Gregory E. Goering & Michael K. Pippenger, 2003. "Durable Goods, Commitment Power and Public Monopolies," Manchester School, University of Manchester, vol. 71(6), pages 611-625, December.
    14. Groot, Fons & Withagen, Cees & de Zeeuw, Aart, 2003. "Strong time-consistency in the cartel-versus-fringe model," Journal of Economic Dynamics and Control, Elsevier, vol. 28(2), pages 287-306, November.
    15. Santiago Rubio, 2011. "On Capturing Rent from a Non-renewable Resource International Monopoly: Prices Versus Quantities," Dynamic Games and Applications, Springer, vol. 1(4), pages 558-580, December.
    16. Gervais, Jean-Philippe & Lapan, Harvey E., 2002. "Time consistent export quotas in an oligopolistic world market," Journal of International Economics, Elsevier, vol. 56(2), pages 445-463, March.
    17. Amundsen, Eirik Schrøder & Bergman, Lars, 2005. "International Redistribution of Resource Rents: An alternative perspective on the Kyoto process," Working Papers in Economics 08/05, University of Bergen, Department of Economics.
    18. Eduardo, Ley & Jessica, Boccardo, 2009. "The Taxation of Motor Fuel: International Comparison," MPRA Paper 19461, University Library of Munich, Germany.
    19. Amundsen, Eirik S. & Bergman, Lars, 2005. "International Redistribution of Resource Rents: An alternative perspective on the Kyoto process," MPRA Paper 10624, University Library of Munich, Germany.
    20. Ngo Long, 2011. "Dynamic Games in the Economics of Natural Resources: A Survey," Dynamic Games and Applications, Springer, vol. 1(1), pages 115-148, March.
    21. Kenji Fujiwara & Ngo Van Long, 2012. "Optimal Tariffs on Exhaustible Resources: The Case of a Quantity Setting Cartel," CESifo Working Paper Series 3721, CESifo.
    22. Kollenbach, Gilbert & Schopf, Mark, 2022. "Unilaterally optimal climate policy and the green paradox," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).

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