IDEAS home Printed from
   My bibliography  Save this paper

Market Power, International CO2 Taxation and Petroleum Wealth




This paper studies the effects on fossil fuel prices, extraction paths and petroleum wealth of an international carbon tax on fossil fuel consumption. We present an intertemporal equilibrium model for fossil fuels, where the main focus is on the oil market. The impacts of a global carbon tax of $10 per barrel of oil depend heavily on the market structure in the oil market. If OPEC acts as a cartel, they reduce their production to maintain the oil price. Thus, the effects on the oil wealth of the competitive fringe is minor, while OPEC's oil wealth is considerably reduced. This may explain the difference in attitudes of OPEC and other oil producing countries to international global warming negotiations. If, on the other side, the oil market is competitive, the highest relative reductions in the oil wealth are to be found among non-OPEC producers.

Suggested Citation

  • Elin Berg & Snorre Kverndokk & Knut Einar Rosendahl, 1996. "Market Power, International CO2 Taxation and Petroleum Wealth," Discussion Papers 170, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:170

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. P O Lindberg & E A Eriksson & L-G Mattsson, 1995. "Invariance of achieved utility in random utility models," Environment and Planning A, Pion Ltd, London, vol. 27(1), pages 121-142, January.
    2. Olsen, Randall J & Smith, D Alton & Farkas, George, 1986. "Structural and Reduced-Form Models of Choice among Alternatives in Continuous Time: Youth Employment under a Guaranteed Jobs Program," Econometrica, Econometric Society, vol. 54(2), pages 375-394, March.
    3. Dagsvik, J.K., 1995. "The Structure of Intertemporal Models for Myopic Discrete Choice with Random Preferences," Memorandum 11/1995, Oslo University, Department of Economics.
    4. Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Berg, Elin & Kverndokk, Snorre & Rosendahl, Knut Einar, 1998. "Gains from cartelisation in the oil market," Energy Policy, Elsevier, vol. 26(9), pages 725-727, August.
    2. Lars Lindholt, 2005. "Beyond Kyoto: backstop technologies and endogenous prices on CO2 permits and fossil fuels," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 2019-2036.
    3. Maryse Labriet & Richard Loulou, 2008. "How Crucial is Cooperation in Mitigating World Climate? Analysis with World-MARKAL," Computational Management Science, Springer, vol. 5(1), pages 67-94, February.
    4. Lars Lindholt, 1999. "Beyond Kyoto: CO2 permit prices and the markets for fossil fuels," Discussion Papers 258, Statistics Norway, Research Department.
    5. Elin Berg & Snorre Kverndokk & Knut Einar Rosendahl, 1999. "Optimal Oil Exploration under Climate Treaties," Discussion Papers 245, Statistics Norway, Research Department.
    6. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Statistics Norway, Research Department.
    7. Sverre Grepperud, 1997. "Soil Depletion Choices under Production and Price Uncertainty," Discussion Papers 186, Statistics Norway, Research Department.
    8. Finn Roar Aune & Snorre Kverndokk & Lars Lindholt & Knut Einar Rosendahl, 2005. "Profitability of different instruments in international climate policies," Discussion Papers 403, Statistics Norway, Research Department.
    9. Einar Bowitz & Ådne Cappelen, 1997. "Incomes Policies and the Norwegian Economy 1973-93," Discussion Papers 192, Statistics Norway, Research Department.
    10. Kverndokk,S. & Rosendahl,E., 2000. "CO2 mitigation costs and ancillary benefits in the Nordic countries, the UK and Ireland : a survey," Memorandum 34/2000, Oslo University, Department of Economics.

    More about this item


    International Carbon Taxes; Exhaustible Resources; Petroleum Wealth.;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:170. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (L Maasø). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.