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- Strategic Pigouvian Taxation, Stock Externalities And Polluting Non-Renewable Resources

Author

Listed:
  • Santiago J. Rubio

    () (Universitat de València)

  • Luisa Escriche

    (Universitat de València)

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.

Suggested Citation

  • Santiago J. Rubio & Luisa Escriche, 1998. "- Strategic Pigouvian Taxation, Stock Externalities And Polluting Non-Renewable Resources," Working Papers. Serie EC 1998-23, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasec:1998-23
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    References listed on IDEAS

    as
    1. Wirl, Franz & Dockner, Engelbert, 1995. "Leviathan governments and carbon taxes: Costs and potential benefits," European Economic Review, Elsevier, vol. 39(6), pages 1215-1236, June.
    2. Farzin, Y H & Tahvonen, O, 1996. "Global Carbon Cycle and the Optimal Time Path of a Carbon Tax," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 515-536, October.
    3. Hoel, Michael & Kverndokk, Snorre, 1996. "Depletion of fossil fuels and the impacts of global warming," Resource and Energy Economics, Elsevier, vol. 18(2), pages 115-136, June.
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    5. Karp, Larry & Newbery, David M., 1991. "Optimal tariffs on exhaustible resources," Journal of International Economics, Elsevier, vol. 30(3-4), pages 285-299, May.
    6. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-177, March.
    7. Sinclair, Peter J N, 1992. "High Does Nothing and Rising Is Worse: Carbon Taxes Should Keep Declining to Cut Harmful Emissions," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(1), pages 41-52, March.
    8. Hoel, Michael, 1993. "Intertemporal properties of an international carbon tax," Resource and Energy Economics, Elsevier, vol. 15(1), pages 51-70, March.
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    13. Karp, Larry, 1984. "Optimality and consistency in a differential game with non-renewable resources," Journal of Economic Dynamics and Control, Elsevier, vol. 8(1), pages 73-97, October.
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    More about this item

    Keywords

    Externalidad de stock; imposición pigouviana; impuesto sobre las emisiones de CO2 Stock externality; pigouvian taxation; carbon tax;

    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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