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The Extractive Firm's Cost Spillover Tax for the Extended Hotelling Model

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Author Info

  • John Hartwick

    ()
    (Queen's University)

  • Andrei Bazhanov

    ()

  • Zhen Song

    ()

Abstract

We consider a competitive extraction industry comprising many small firms, each with a slightly different quality of mineral holdings. With "rapidly" declining quality of holding per firm, we observe rent declining over an interval. We then take up the familiar planning model and isolate the tax required to make decentralized extraction by many distinct, competitive firms replicate the planning solution.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1169.pdf
File Function: First version 2007
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1169.

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Length: 13 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:qed:wpaper:1169

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Keywords: exhaustible resources; resource rent; competitive extraction; corrective tax;

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  1. Lozada, Gabriel A., 1993. "Existence and characterization of discrete-time equilibria in extractive industries," Resource and Energy Economics, Elsevier, vol. 15(3), pages 249-254, September.
  2. John Livernois & Patrick Martin, 2001. "Price, scarcity rent, and a modified r per cent rule for non-renewable resources," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 827-845, August.
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