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Optimum Commodity Taxation with a Non-Renewable Resource

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  • Julien Daubanes
  • Pierre Lasserre
Abstract
Under standard assumptions, optimum commodity taxation (OCT) should target non-renewable resources (NRRs) in priority. NRRs should be taxed at a higher rate than otherwise-identical conventional commodities. NRR substitutes and complements should receive a particular tax treatment. When reserves are endogenous, OCT for NRRs distorts both developed reserves, which are reduced, and their depletion, which is slowed down. Reserves are a form of capital and royalties tax its income: our results contradict Chamley’s conclusion that capital should not be taxed in the long run. In a NRR-importing economy, Ramsey taxes are further increased because they allow the capture of foreign rents.

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  • Julien Daubanes & Pierre Lasserre, 2015. "Optimum Commodity Taxation with a Non-Renewable Resource," CESifo Working Paper Series 5270, CESifo.
    • Handle: RePEc:ces:ceswps:_5270
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    Cited by:

    1. Naef, Alain, 2024. "The impossible love of fossil fuel companies for carbon taxes," Ecological Economics, Elsevier, vol. 217(C).
    2. Julien Daubanes & Pierre Lasserre, 2011. "Optimum Commodity Taxation with a Non-Renewable Resource," CIRANO Working Papers 2011s-05, CIRANO.
    3. Jaakkola, Niko & Spiro, Daniel & van Benthem, Arthur A., 2019. "Finders, keepers?," Journal of Public Economics, Elsevier, vol. 169(C), pages 17-33.
    4. van der Ploeg, Frederick, 2018. "Political economy of dynamic resource wars," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 765-782.
    5. Robin Boadway & Michael Keen, 2014. "Rent Taxes and Royalties in Designing Fiscal Regimes for Non-Renewable Resources," CESifo Working Paper Series 4568, CESifo.
    6. Frederick van der Ploeg, 2017. "Rapacious Oil Exploration in face of Regime Switches: Breakthrough Renewable Energy and Dynamic Resource Wars," Development Working Papers 415, Centro Studi Luca d'Agliano, University of Milano.
    7. Karolina Ryszka, 2013. "Resource Extraction in a Political Economy Framework," Tinbergen Institute Discussion Papers 13-094/VIII, Tinbergen Institute.
    8. Julien Daubanes & Lisa Leinert, 2012. "Optimum Tariffs and Exhaustible Resources: Theory and Evidence for Gasoline," CER-ETH Economics working paper series 12/163, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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    More about this item

    Keywords

    optimum commodity taxation; inverse elasticity rule; non-renewable resources; Hotelling resource; supply elasticity; demand elasticity; capital income taxation;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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