The literature on taxation of rents from nonrenewable resources uses different theoretical assumptions and methods and a variety of empirical observations to arrive at widely diverging conclusions. Many studies use models and methods which disregard uncertainty, investigating distortionary effects of different taxes on whether, when, and how to explore for, develop and operate resource deposits. Introducing uncertainty into the analysis opens a range of challenges, and leads to results which cast doubt upon the relevance of studies which neglect uncertainty. There are, however, several ways to analyze uncertainty, regarding companies' behavior, resource price processes, and diversification opportunities, all with different implications for taxation. Methods developed in financial economics since the 1980's are promising, but still not in widespread use. Some more specific topics covered in this review are optimal risk sharing between companies and gov- ernments, time consistency and scal stability, the relationship between taxes and discount rates, and transfer pricing.
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number
01/2009.
Find related papers by JEL classification: B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
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