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The Extractive Firm's Cost Spillover Tax For The Extended Hotelling Model

Author

Listed:
  • Andrei Bazhanov

    (Far Eastern National University, Vladivostok)

  • John Hartwick
  • Zhen Song

    (Queen's University)

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 fi rm we observe rent declining over an interval. We then take up the familiar planning model and isolate the tax required to make decentralized extraction by many distinct, competitive fi rms replicate the planning solution.

Suggested Citation

  • Andrei Bazhanov & John Hartwick & Zhen Song, 2007. "The Extractive Firm's Cost Spillover Tax For The Extended Hotelling Model," Working Paper 1169, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1169
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1169.pdf
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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. John Livernois & Patrick Martin, 2001. "Price, scarcity rent, and a modified r per cent rule for non-renewable resources," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 827-845, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    exhaustible resources; resource rent; competitive extraction; corrective tax;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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