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Optimal Tariffs on Exhaustible Resources: The Case of Quantity Setting

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  • Kenji Fujiwara

    ()
    (School of Economics, Kwansei Gakuin University)

  • Ngo Van Long

    (Department of Economics, McGill University)

Abstract

Constructing a dynamic game model of trade of an exhaustible resource, this paper compares feedback Nash and Stackelberg equilibria. We consider two di erent leadership scenarios: leadership by the importing country, and leadership by the exporting country. We numerically show that as compared to the Nash equilibrium, both countries are better o if the importing country is a leader, but that the follower becomes worse o if the exporting country is a leader. Consequently, the world welfare is highest under the importing country's leadership and lowest under the exporting country's leadership.

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File URL: http://192.218.163.163/RePEc/pdf/kgdp82.pdf
File Function: First version, 2012
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Bibliographic Info

Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 82.

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Length: 21 pages
Date of creation: Feb 2012
Date of revision: Feb 2012
Handle: RePEc:kgu:wpaper:82

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Keywords: dynamic game; feedback Nash equilibrium; feedback Stackelberg equilibrium;

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  1. Kenji Fujiwara & Ngo Van Long, 2010. "Welfare Implications of Leadership in a Resource Market Under Bilateral Monopoly," CIRANO Working Papers 2010s-16, CIRANO.
  2. 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.
  3. Van Long Ngo, 2010. "A Survey Of Dynamic Games In Economics:," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., volume 1, number 7577.
  4. James L. Smith, 2008. "World Oil: Market or Mayhem?," Working Papers, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research 0815, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  5. 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.
  6. Ngo Van Long & Gerhard Sorger, 2009. "A dynamic pricipal-agent problem as a feedback Stackelberg differentioal game," Vienna Economics Papers, University of Vienna, Department of Economics 0905, University of Vienna, Department of Economics.
  7. Tahvonen, Olli, 1996. "Trade with Polluting Nonrenewable Resources," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 1-17, January.
  8. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, 9.
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Cited by:
  1. Keutiben, Octave, 2014. "On capturing foreign oil rents," Resource and Energy Economics, Elsevier, vol. 36(2), pages 542-555.
  2. Michielsen, Thomas O., 2014. "Strategic resource extraction and substitute development," Resource and Energy Economics, Elsevier, vol. 36(2), pages 455-468.

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