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Efficiency Inducing Tax for a Common Property Oligopoly

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  • Karp, Larry

Abstract

The author characterizes the Markov perfect tax that induces a common property oligopoly to extract efficiently a nonrenewable resource. For linear and isoelastic demand, he provides closed-form expressions of the unique (specific) tax. Industry profits may be higher or lower in the oligopoly with the tax, relative to the competitive equilibrium with property rights. For linear or isoelastic demand, there exists no feasible open-loop tax that induces efficient extraction. In this case, the policymaker gains no advantage from being able to make binding commitments. Copyright 1992 by Royal Economic Society.

Suggested Citation

  • Karp, Larry, 1992. "Efficiency Inducing Tax for a Common Property Oligopoly," Economic Journal, Royal Economic Society, vol. 102(411), pages 321-332, March.
    • Handle: RePEc:ecj:econjl:v:102:y:1992:i:411:p:321-32
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    References listed on IDEAS

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    8. Karp, Larry, 1992. "Social Welfare in a Common Property Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 353-372, May.
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    Cited by:

    1. Benchekroun, Hassan & Gaudet, Gérard, 2015. "On the effects of mergers on equilibrium outcomes in a common property renewable asset oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 209-223.
    2. Akihiko Yanase, 2006. "Dynamic Voluntary Provision of Public Goods and Optimal Steady‐State Subsidies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(1), pages 171-179, January.
    3. Colombo, Luca & Labrecciosa, Paola, 2022. "Product quality differentiation in a renewable resource oligopoly," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    4. Colombo, Luca & Labrecciosa, Paola, 2019. "Stackelberg versus Cournot: A differential game approach," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 239-261.
    5. repec:tiu:tiucen:200880 is not listed on IDEAS
    6. Martín-Herrán, Guiomar & Rubio, Santiago J., 2021. "On coincidence of feedback and global Stackelberg equilibria in a class of differential games," European Journal of Operational Research, Elsevier, vol. 293(2), pages 761-772.
    7. Martín-Herrán, Guiomar & Rubio, Santiago J., 2016. "The Strategic Use of Abatement by a Polluting Monopoly," ETA: Economic Theory and Applications 244532, Fondazione Eni Enrico Mattei (FEEM).
    8. Benchekroun, H. & Ray Chaudhuri, A., 2008. "Collusion Inducing Taxation of a Polluting Oligopoly," Discussion Paper 2008-80, Tilburg University, Center for Economic Research.
    9. Herrmann, Markus & Nkuiya, Bruno & Dussault, Anne-Renée, 2013. "Innovation and antibiotic use within antibiotic classes: Market incentives and economic instruments," Resource and Energy Economics, Elsevier, vol. 35(4), pages 582-598.
    10. Benchekroun, Hassan & Ray Chaudhuri, Amrita, 2011. "Environmental policy and stable collusion: The case of a dynamic polluting oligopoly," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 479-490, April.
    11. Karp, Larry, 1992. "Social Welfare in a Common Property Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 353-372, May.
    12. Guiomar Martín-Herrán & Santiago J. Rubio, 2016. "The Strategic Use of Abatement by a Polluting Monopoly," Working Papers 2016.58, Fondazione Eni Enrico Mattei.

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