The exploitation of fossil fuels under the threat of global warming and carbon taxes: A dynamic game approach
AbstractThis paper considers efficient and monopolistic extraction of non-renewable (energy) resources when the resource consumption leads simultaneously to a stock externality (‘global warming’). The case of monopolistic supply leads to a dynamic game between cartelised producers and a consumers' government. For this game, we compute linear Markov perfect strategies that are characterized by preemption of the tax at the wellhead (when compared with the open loop solution). Unfortunately, the general, asymmetric two-state variable model does not allow for an explicit analytical solution. Therefore, a simplified version with one state variable (neglecting depreciation of the stock of the pollutant) is studied and a numerical example is presented. It turns out that the simplified and analytically solved framework provides a good approximation of the initial phase of the transient behaviour but not of the long run. Copyright Kluwer Academic Publishers 1995
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental & Resource Economics.
Volume (Year): 5 (1995)
Issue (Month): 4 (June)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100263
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-37, July.
- Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
- Pindyck, Robert S, 1978. "The Optimal Exploration and Production of Nonrenewable Resources," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 841-61, October.
- Hoel, Michael, 1993. "Intertemporal properties of an international carbon tax," Resource and Energy Economics, Elsevier, vol. 15(1), pages 51-70, March.
- Wirl Franz, 1994. "Pigouvian Taxation of Energy for Flow and Stock Externalities and Strategic, Noncompetitive Energy Pricing," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 1-18, January.
- Feichtinger, Gustav & Wirl, Franz, 1993. "A Dynamic Variant of the Battle of the Sexes," International Journal of Game Theory, Springer, vol. 22(4), pages 359-80.
- Wirl, Franz, 1993. "Energy pricing when externalities are taxed," Resource and Energy Economics, Elsevier, vol. 15(3), pages 255-270, September.
- Karp, Larry & Newbery, David M., 1991. "Optimal tariffs on exhaustible resources," Journal of International Economics, Elsevier, vol. 30(3-4), pages 285-299, May.
- Nordhaus, William D, 1993. "Optimal Greenhouse-Gas Reductions and Tax Policy in the "Dice" Model," American Economic Review, American Economic Association, vol. 83(2), pages 313-17, May.
- Reynolds, Stanley S., 1991. "Dynamic oligopoly with capacity adjustment costs," Journal of Economic Dynamics and Control, Elsevier, vol. 15(3), pages 491-514, July.
- Santiago J. Rubio & Luisa Escriche, 1998.
"- Strategic Pigouvian Taxation, Stock Externalities And Polluting Non-Renewable Resources,"
Working Papers. Serie EC
1998-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- 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.
- Jon Strand, 2008. "Importer and Producer Petroleum Taxation: A Geo-Political Model," IMF Working Papers 08/35, International Monetary Fund.
- Santiago J. Rubio, 2002.
"On The Coincidence Of The Feedback Nash And Stackelberg Equilibria In Economic Applications Of Differential Games,"
Working Papers. Serie AD
2002-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Santiago J. Rubio, 2003. "On the Coincidence of the Feedback Nash and Stackelberg Equilibria in Economic Applications of Differential Games," Economic Working Papers at Centro de Estudios Andaluces E2003/40, Centro de Estudios Andaluces.
- repec:old:wpaper:355 is not listed on IDEAS
- Christoph Böhringer & Knut Einar Rosendahl & Jan Schneider, 2013. "Unilateral Climate Policy: Can OPEC resolve the Leakage Probem?," Working Papers V-355-13, University of Oldenburg, Department of Economics, revised Mar 2013.
- Strand, Jon, 2010. "Optimal fossil-fuel taxation with backstop technologies and tenure risk," Energy Economics, Elsevier, vol. 32(2), pages 418-422, March.
- Kenji Fujiwara & Ngo Van Long, 2011.
"Welfare Implications of Leadership in a Resource Market under Bilateral Monopoly,"
Discussion Paper Series
76, School of Economics, Kwansei Gakuin University, revised Sep 2011.
- 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.
- Kenji Fujiwara & Ngo Van Long, 2010. "Welfare Implications of Leadership in a Resource Market Under Bilateral Monopoly," CIRANO Working Papers 2010s-16, CIRANO.
- Wie, Jiegen & Wennlock, Magnus & Johansson, Daniel J.A. & Sterner, Thomas, 2011. "The Fossil Endgame: Strategic Oil Price Discrimination and Carbon Taxation," Discussion Papers dp-11-26, Resources For the Future.
- Sandal, Leif Kristoffer & Steinshamn, Stein Ivar, 2004. "Pollution Decay, Consumer Awareness and Optimal Carbon Taxes," Discussion Papers 2004/7, Department of Business and Management Science, Norwegian School of Economics.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.