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Dynamic Taxation of Non-renewable Natural Resources Under Asymmetric Information About Reserves

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  • Petter Osmundsen

Abstract

Optimal regulation is developed for a case with type-dependent dynamics in costs. In exploiting nonrenewable natural resources, a government faces the problem that extraction companies possess private information about the size of the reserves. Optimal contracts, in a two-period framework, distort both the extent and the pace of depletion. The regulatory optimum is implementable by a menu of tangent planes, generated by license fees and royalties, or by a corporate income tax system containing type-dependent depletion allowances and tax-exempted income levels. If the terminal time is endogenized, it is optimal also to distort the number of extraction periods.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 31 (1998)
Issue (Month): 4 (November)
Pages: 933-951

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Handle: RePEc:cje:issued:v:31:y:1998:i:4:p:933-951

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Citations

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Cited by:
  1. Lionel Thomas & Jean-Christophe Poudou, 2000. "Concession minière et asymétrie d'information," Économie et Prévision, Programme National Persée, vol. 143(2), pages 129-138.
  2. Eduardo Engel & Ronald Fischer, 2008. "Optimal Resource Extraction Contracts under Threat of Expropriation," Cowles Foundation Discussion Papers 1636, Cowles Foundation for Research in Economics, Yale University.
  3. repec:mop:credwp:03.10.38 is not listed on IDEAS
  4. Helal, Uddin & Rahman, Shaikh Mahfuzur, 2006. "Optimal Contracts for Exploration with Cost Recovery of an Exhaustible Natural Resource Under Asymmetric Information," Working Papers 28578, University of Maryland, Department of Agricultural and Resource Economics.
  5. Patrick Gonzalez, 2013. "Taxing a Natural Resource with a Minimum Revenue Requirement," Cahiers de recherche CREATE 2013-6, CREATE.
  6. Osmundsen, Petter, 2002. "Regulation of common property resources under private information about resource externalities," Resource and Energy Economics, Elsevier, vol. 24(4), pages 349-366, November.
  7. Rahman, Shaikh Mahfuzur & Helal, Uddin, 2004. "Optimal Contracts For Exploration With Cost Recovery Of An Exhaustible Natural Resource Under Asymmetric Information," 2004 Annual meeting, August 1-4, Denver, CO 20180, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Smith, James L., 2013. "Issues in extractive resource taxation: A review of research methods and models," Resources Policy, Elsevier, vol. 38(3), pages 320-331.
  9. Julie Ing, 2012. "The impact of commitment on nonrenewable resources management with asymmetric information on costs," Working Papers 1205, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  10. Osmundsen, Petter & Roll, Kristin Helen & Tveterås, Ragnar, 2010. "Faster Drilling with Expercience?," UiS Working Papers in Economics and Finance 2010/7, University of Stavanger.
  11. Julie Ing, 2012. "The impact of commitment on nonrenewable resources management with asymmetric information on costs," Working Papers halshs-00690896, HAL.
  12. Osmundsen, Petter & Roll, Kristin Helen & Tveteras, Ragnar, 2012. "Drilling speed—the relevance of experience," Energy Economics, Elsevier, vol. 34(3), pages 786-794.
  13. Hung, Nguyen Manh & Poudou, Jean-Christophe & Thomas, Lionel, 2006. "Optimal resource extraction contract with adverse selection," Resources Policy, Elsevier, vol. 31(2), pages 78-85, June.
  14. Mireille Chiroleu-Assouline & Sebastien Roussel, 2014. "Payments for Carbon Sequestration in Agricultural Soils: Incentives for the Future and Rewards for the Past," CEEES Paper Series CE3S-01/14, European University at St. Petersburg, Department of Economics.

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