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Carbon Tax and OPEC’s Rents Under a Ceiling Constraint *
Author(s) -
Dullieux Rémy,
Ragot Lionel,
Schubert Katheline
Publication year - 2011
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2011.01678.x
Subject(s) - economics , economic rent , carbon tax , ceiling (cloud) , cartel , ad valorem tax , microeconomics , tax basis , scarcity , monopoly , international economics , monetary economics , collusion , tax reform , market economy , state income tax , greenhouse gas , ecology , gross income , physics , meteorology , biology
We study the Markov‐perfect Nash equilibrium (MPNE) of a game between oil‐importing countries, who seek to maintain the atmospheric carbon concentration under a given ceiling, and oil‐exporting countries. The oil‐importing countries set a carbon tax and the oil‐exporting countries control the producer price. We obtain implicit feedback rules and explicit non‐linear time paths of extraction, carbon tax, and producer price. Consumers are always able to reap some share of the scarcity and monopoly rents, whereas producers partially pre‐empt the carbon tax only if the marginal damage under the ceiling is small. We compare the MPNE to the efficient, open‐loop, and cartel‐without‐tax equilibria.