Limit pricing and the (in)effectiveness of the carbon tax

• 成果类型: Article
• 署名作者: de Sa, Saraly Andrade; Daubanes, Julien
• 署名单位: Swiss Federal Institutes of Technology Domain; ETH Zurich
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2016.04.006
• 发表日期: 2016
• 页码: 28-39
• 关键词: Limit-pricing monopoly; Demand elasticity; Carbon tax; Non-renewable resources; Oil substitutes; Shale oil

摘要

We present a theory of limit-pricing monopoly in non-renewable-resource production. Facing a very inelastic demand, an oil monopoly seeks to induce the highest price that does not destroy its demand, unlike the conventional Hotellian analysis: The monopoly tolerates some ordinary substitutes to its oil but deters high-potential ones. With limit pricing, policy-induced extraction changes do not obey the usual logic. For example, oil taxes have no effect on current oil production. Extraction increases when high-potential substitutes are promoted, but can be effectively reduced by supporting ordinary substitutes. The carbon tax not only applies to oil; it also penalizes its ordinary (carbon) substitutes, whose market shares are taken over by the monopoly. Thus, the carbon tax ambiguously affects current and long-term oil production and carbon emissions. (C) 2016.Elsevier B.V. All rights reserved.