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

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  • Hartwick, John
  • Bazhanov, Andrei
  • Song, Zhen

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 iso- late the tax required to make decentralized extraction by many distinct, competitive firms replicate the planning solution.

Suggested Citation

  • Hartwick, John & Bazhanov, Andrei & Song, Zhen, 2007. "The Extractive Firm’s Cost Spillover Tax for the Extended Hotelling Model," Queen's Economics Department Working Papers 273645, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:273645
    DOI: 10.22004/ag.econ.273645
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    References listed on IDEAS

    as
    1. Harold Hotelling, 1931. "The Economics of Exhaustible Resources," Journal of Political Economy, University of Chicago Press, vol. 39(2), pages 137-137.
    2. 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.
    3. David Levhari & Nissan Liviatan, 1977. "Notes on Hotelling's Economics of Exhaustible Resources," Canadian Journal of Economics, Canadian Economics Association, vol. 10(2), pages 177-192, May.
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