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Taxation of a polluting non-renewable resource in the heterogeneous world

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Author Info

  • Julien Daubanes

    (Ecole Polytechnique Fédérale de Lausanne)

  • André Grimaud

    (Economie des Ressources Naturelles, INRA
    Université Toulouse 1)

Abstract

This paper extends the literature on the taxation of polluting exhaustible resources by taking international heterogeneities and national tax-setting into account. We propose a two-country Romer model of endogenous growth in which the South is endowed with the stock of an essential polluting non-renewable resource and world economic growth is driven by a northern research sector. We consider the stock of pollution as affecting global welfare. First, we characterize the optimal environmental taxation policies. Second, we examine the impacts of national taxes. Their time profile determines the extraction path, the dynamics of pollution accumulation and that of world output. Their respective levels entail inter-country interactions by altering the efficiency of the world resource allocation, the tax revenues and the resource rents. We study isolatedly the distortional and distributional effects of local taxes. Then, we completely assess the overall impact of a unilateral tax increase. Finally, we find that, even if heterogeneous countries coordinate their taxation policies to correct the global environmental problem, their divergent strategic interests cause another global, non-environmental distortion in the allocation of the resource.

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Bibliographic Info

Paper provided by Institut National de la Recherche Agronomique, France in its series Working Papers with number 46270.

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Length: 567-588
Date of creation: 2010
Date of revision:
Publication status: Published in Environmental and Resource Economics
Handle: RePEc:inr:wpaper:46270

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Keywords: NON-RENEWABLE RESOURCES; STOCK POLLUTION; ENDOGENOUS GROWTH; ENVIRONMENTAL TAXATION; INTER-COUNTRY EFFECTS; ressource non renouvelable; politique environnementale; taxepollution;

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References

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  1. Christian Groth & Poul Schou, 2000. "Can Nonrenewable Resources Alleviate the Knife-edge Character of Endogenous Growth," Discussion Papers 00-02, University of Copenhagen. Department of Economics.
  2. Krautkraemer, Jeffrey A, 1985. "Optimal Growth, Resource Amenities, and the Preservation of Natural Environments," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 153-70, January.
  3. Goulder, Lawrence H. & Mathai, Koshy, 2000. "Optimal CO2 Abatement in the Presence of Induced Technological Change," Journal of Environmental Economics and Management, Elsevier, vol. 39(1), pages 1-38, January.
  4. Schou, Poul, 2002. " When Environmental Policy Is Superfluous: Growth and Polluting Resources," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 605-20, December.
  5. Reyer Gerlagh & Snorre Kverndokk & Knut Rosendahl, 2009. "Optimal Timing of Climate Change Policy: Interaction Between Carbon Taxes and Innovation Externalities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 43(3), pages 369-390, July.
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Citations

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Cited by:
  1. Lucas Bretschger & Nujin Suphaphiphat, 2012. "Use Less, Pay More: Can Climate Policy Address the Unfortunate Event for Being Poor?," CER-ETH Economics working paper series 12/166, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  2. Lucas Bretschger & Simone Valente, 2010. "Endogenous Growth, Asymmetric Trade and Resource Taxation," CER-ETH Economics working paper series 10/132, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  3. Daubanes, Julien, 2009. "Changement climatique, instruments économiques et propositions pour un accord post-Kyoto: une synthèse," TSE Working Papers 09-006, Toulouse School of Economics (TSE).
  4. Daubanes, J., 2007. "On the Optimal Taxation of an Exhaustible Resource Under Monopolistic Extraction," Discussion Paper, Tilburg University, Center for Economic Research 2007-34, Tilburg University, Center for Economic Research.
  5. 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.
  6. Lucas Bretschger & Simone Valente, 2011. "International economics and natural resources: from theory to policy," International Economics and Economic Policy, Springer, vol. 8(2), pages 115-120, June.
  7. Simone Valente & Luca Bretschger, 2013. "International Resource Tax Policies Beyond Rent Extraction," Working Paper Series 15313, Department of Economics, Norwegian University of Science and Technology.
  8. Julien Daubanes & Lisa Leinert, 2012. "Optimum Tariffs and Exhaustible Resources: Theory and Evidence for Gasoline," CER-ETH Economics working paper series 12/163, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
  9. Daubanes, Julien, 2009. "Taxation of Oil Products and GDP Dynamics of Oil-Rich Countries," TSE Working Papers 09-012, Toulouse School of Economics (TSE).
  10. Giovanni Ganelli & Juha Tervala, 2010. "International Transmission of Environmental Policy: A New Keynesian Perspective," Discussion Papers, Aboa Centre for Economics 58, Aboa Centre for Economics.
  11. Ruxanda Berlinschi & Julien Daubanes, 2009. "Prendre d’une main et donner de l’autre : taxation des produits pétroliers et aide internationale," Économie et Prévision, Programme National Persée, vol. 190(4), pages 21-37.
  12. Shkarlet, Serhiy & Petrakov, Iaroslav, 2013. "Environmental Taxation Evolution in Ukraine: Trends, Challenges and Outlook," MPRA Paper 45168, University Library of Munich, Germany, revised 18 May 2013.
  13. repec:ebl:ecbull:v:17:y:2008:i:13:p:1-11 is not listed on IDEAS
  14. Julien Daubanes, 2008. "Fossil fuels supplied by oligopolies: On optimal taxation and rent capture," Economics Bulletin, AccessEcon, vol. 17(13), pages 1-11.
  15. Bretschger, Lucas & Valente, Simone, 2012. "Endogenous growth, asymmetric trade and resource dependence," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 301-311.

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