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Rent-Extracting Tariffs and the Management of Exhaustible Resources

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  • James Brander
  • Slobodan Djajic

Abstract

The paper examines the interaction between a resource-exporting and a resource-importing country. The exporter chooses an optimal depletion rate and decides the allocation of the extracted resource between exports and domestic use. Optimal management from a national view entails inefficiency from a global perspective because too little resource is exported since the supplying country exploits its monopoly power. The importing country, however, has incentive to extract some of the resource rent with a tariff. The optimal tariff induces greater overall inefficiency.

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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 468.

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Length: 21
Date of creation: 1982
Date of revision:
Handle: RePEc:qed:wpaper:468

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