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Strategic pigouvian taxation, stock externalities and polluting non-renewable resources

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  • Rubio, Santiago J.
  • Escriche, Luisa

Abstract

This paper extends Wirl and Dockner¿s (1995) model designed to analyze the long-term bilateral interdependence between a resource exporting cartel and a coalition of resource importing country governments. Firstly, depletion effects are introduced into the analysis of the intertemporal properties of a pigouvian tax. Secondly, the feedback Stackelberg equilibria are computed. The results show that the dynamics of the tax depends critically on the level of the marginal environmental damage. Moreover, they also show that the tax defined by the Markov-perfect Nash equilibrium is a neutral pigouvian tax in the sense that it only corrects the market inefficiency caused by the stock externality. However, for the feedback Stackelberg equilibrium the tax is advantageous for the importing countries since the strategic pigouvian taxation reduces the market power of the cartel. Este trabajo propone una extensión del modelo de Wirl y Dockner (1995) diseñado para analizar lainterdependencia bilateral a largo plazo entre un cartel exportador de un recurso y una coalición depaíses importadores. En primer lugar, se incorporan los efectos agotamiento al análisis de laspropiedades intertemporales de un impuesto pigouviano. En segundo lugar, se calculan los equilibriosfeedback de Stackelberg. Los resultados muestran que la dinámica del impuesto dependecriticamente del nivel del daño medioambiental marginal. Además, también demuestran que elimpuesto definido por el equilibrio de Nash perfecto de Markov es un impuesto pigouviano neutral en elsentido que sólo corrige la ineficiencia causada por la externalidad del stock. Sin embargo, para elequilibrio feedback de Stackelberg el impuesto es ventajoso para los países importadores ya que laimposición pigouviana estratégica reduce el poder de mercado del cartel.
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Suggested Citation

  • 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.
  • Handle: RePEc:eee:pubeco:v:79:y:2001:i:2:p:297-313
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    as
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    More about this item

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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