European Parliament Library

Importer and Producer Petroleum Taxation :, A Geo-Political Model, Jon Strand

We derive non-cooperative Nash equilibrium (NE) importer and exporter petroleum excise taxes given full within-group tax coordination, but no coordination between groups, assuming that importers do not produce and exporters do not consume petroleum, and petroleum consumption causes a global externality. The aggregate NE tax is found to consist of an externality component and an optimal tariff component, and exceeds the standard Pigou tax. The environmental component in isolation is however less than the Pigou tax. With Stackelberg tax setting, the leader's tax is higher than in the Ne, and the follower's tax lower, and the overall tax higher. We show that importers prefer to set a tax instead of an import quota, since exporters' optimal response to a quota is a higher tax. An optimal cap-and-trade scheme will thus fare worse than an optimal tax scheme for importers, and will imply greater petroleum consumption and carbon emissions. When exporters behave as a cartel satisfying demand at a fixed export price, exporters' optimal tax is higher, while importers tax rule is Pigouvian. Exporters then gain at the expense of importers
Table Of Contents
Contents; I. Introduction; II. Nash Equilibrium Importer Petroleum Taxes; A. The Importer Solution; B. The Producer Solution; C. Overall Nash Equilibrium; III. Benchmark Solutions; A. Benchmark 1: Optimized World Welfare; B. Benchmark 2: No Taxation; IV. Stackelberg Solution with Importers as Leader; V. Other Strategic Cases; A. Quantitative Importer Targets with No Exporter Taxes; B. Importer Output Targets with Optimal Exporter Taxes; C. Exporters Set Both Output Price and Quantity; VI. Conclusions and Discussion; Tables; 1. Oil Production and Consumption by Major Regions, 2003; References
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (25 p.)
Specific Material Designation
Form Of Item

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