Efficiency-inducing lump sum taxation in non-renewable resource industries

Hassan Benchekroun, Luca Colombo and Paola Labrecciosa
Additional contact information
Hassan Benchekroun: McGill University = Université McGill [Montréal, Canada]
Luca Colombo: Rennes SB - Rennes School of Business

Post-Print from HAL

Abstract: This paper studies the design of efficiency-inducing lump-sum taxes in common-pool non-renewable resource industries. Although fixed payments such as royalties, rents, and lease fees play a central role in real-world resource taxation, their theoretical properties remain largely unexplored. We develop a dynamic Cournot model in which firms exploit a shared exhaustible stock and pay a lump-sum tax that depends solely on the current resource level. We characterize the tax that decentralizes the social planner's extraction path under both open loop and closed-loop information structures. When marginal extraction costs are independent of the resource stock, the optimal tax under open-loop strategies is positive and exceeds the corresponding tax under closed loop strategies. In contrast, when extraction costs decline with the stock, the optimal tax in both information structures may be positive or negative, with its sign determined by a threshold of industry concentration, which varies across the two settings. Closed-form solutions for linear and iso-elastic demands reveal that the optimal tax can be strictly negative (resp. positive) even in the interval of resource stocks where the laissez-faire equilibrium output is higher (resp. lower) than the social planner's solution.

Keywords: Oligopoly; Efficiency-inducing taxation; Tragedy of the commons; Non-renewable resources; Game theory (search for similar items in EconPapers)
Date: 2027-01
References: Add references at CitEc
Citations:

Published in European Journal of Operational Research, 2027, 336 (2), pp.661-672. ⟨10.1016/j.ejor.2026.05.010⟩

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:hal:journl:hal-05796402

DOI: 10.1016/j.ejor.2026.05.010

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().