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Mineral Exploration and the Neutrality of Rent Royalties

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  • H. F. CAMPBELL
  • R. K. LINDNER

Abstract

Bayesian techniques are used to analyze the effect on mineral project selection of the imposition of an ideal form of resource rent tax in which all costs, including exploration costs, are fully deducted from taxable income. It is demonstrated that higher rates of resource rent tax generally will alter the a priori probability of a deposit being mined due to a direct risk‐sharing effect as well as indirectly by changing the amount of exploration undertaken before the firm decides whether to mine or not.

Suggested Citation

  • H. F. Campbell & R. K. Lindner, 1985. "Mineral Exploration and the Neutrality of Rent Royalties," The Economic Record, The Economic Society of Australia, vol. 61(1), pages 445-449, March.
    • Handle: RePEc:bla:ecorec:v:61:y:1985:i:1:p:445-449
    DOI: 10.1111/j.1475-4932.1985.tb01996.x
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    References listed on IDEAS

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    1. Garnaut, Ross & Clunies Ross, Anthony, 1975. "Uncertainty, Risk Aversion and the Taxing of Natural Resource Projects," Economic Journal, Royal Economic Society, vol. 85(338), pages 272-287, June.
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    1. K. G. Williams & R. W. Fraser, 1985. "State Taxation of the Iron Ore Industry in Western Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 18(1), pages 30-36, March.
    2. Fraser, Rob, 1998. "An analysis of the relationship between uncertainty-reducing exploration and resource taxation," Resources Policy, Elsevier, vol. 24(4), pages 199-205, December.

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