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Fossil fuels supplied by oligopolies: On optimal taxation and rent capture

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  • Julien Daubanes

    (CER-ETH at Swiss Federal Institute of Technology Zürich and LERNA at Toulouse School of Economics)

Abstract

This article investigates the optimal taxation of a polluting exhaustible resource supplied by an oligopoly in a partial equilibrium model. A single tax/subsidy scheme is sufficient to correct both distortions arising from market power and pollution externality. Moreover, there exists an infinite family of such optimal taxation instruments. Then, I study how this set is affected by the degree of concentration of the resource suppliers. In particular, the more concentrated the extraction sector, the less falling (or the more rising) over time the optimal tax rate. Finally, although concentration tends to increase the total rent of the extraction sector, it reduces the potential tax revenues to be earned by the regulator while inducing efficiency.

Suggested Citation

  • Julien Daubanes, 2008. "Fossil fuels supplied by oligopolies: On optimal taxation and rent capture," Economics Bulletin, AccessEcon, vol. 17(13), pages 1-11.
    • Handle: RePEc:ebl:ecbull:eb-08q30001
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    References listed on IDEAS

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    Cited by:

    1. Voss, Achim & Schopf, Mark, 2021. "Lobbying over exhaustible-resource extraction," European Economic Review, Elsevier, vol. 135(C).
    2. Michele Bisceglia, 2020. "Optimal taxation in a common resource oligopoly game," Journal of Economics, Springer, vol. 129(1), pages 1-31, January.
    3. An Zeng & Stefano Battiston, 2016. "The Multiplex Network of EU Lobby Organizations," PLOS ONE, Public Library of Science, vol. 11(10), pages 1-15, October.
    4. Daubanes, Julien, 2009. "Taxation of Oil Products and GDP Dynamics of Oil-Rich Countries," TSE Working Papers 09-012, Toulouse School of Economics (TSE).
    5. Julien Daubanes & André Grimaud, 2010. "Taxation of a Polluting Non-renewable Resource in the Heterogeneous World," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(4), pages 567-588, December.
    6. Julien Daubanes & Ruxanda Berlinschi, 2009. "Prendre d'une main et donner de l'autre : taxation des produits pétroliers et aide internationale," Economie & Prévision, La Documentation Française, vol. 0(4), pages 21-37.

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    More about this item

    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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