The Depletion Allowance Revisited

Paul Davidson

Chapter 24 in Inflation, Open Economies and Resources, 1991, pp 311-318 from Palgrave Macmillan

Abstract: Abstract The scholarly defenders of the depletion allowance1 have based their exoneration of this special tax privilege primarily on two economic points: (1) percentage depletion is an offset to the non-neutrality of the corporate income tax; and (2) the tax handling of the oil and gas industry is an important stimulus to exploration of new domestic oil fields; i.e. in the absence of the depletion allowance, exploration of many wildcat fields in time period t0 would be negligible because at existing market prices in period t0 (and expected prices in the near future) the prospects of future revenues are not sufficient to encourage profit maximizing entrepreneurs to explore these fields with existing technology. Implicit in this view is the belief that the commitment of additional resources in exploration and development of new fields in time period t0 is in the public interest.

Keywords: Petroleum Industry; Extensive Margin; Economic Rent; Supply Price; Royalty Payment (search for similar items in EconPapers)
Date: 1991
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-11516-7_24

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349115167

DOI: 10.1007/978-1-349-11516-7_24

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().