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Depreciation rules and value invariance with extractive firms

Depreciation rules and value invariance with extractive firms
Depreciation rules and value invariance with extractive firms
The application of Samuelson's theorem on value invariance to the case of intertemporally optimizing firms is shown to require a judiciously chosen economic depreciation formula which depends on both current stock and current flow variables, in order to prevent the firms from changing their actions in the face of the tax regime. We illustrate by deriving depreciation rules which achieve non-distortingness of actions and value-invariance for resource-extracting firms.
0165-1889
99-116
Hartwick, John M.
8294a082-49ef-4535-95e2-0ec151ae075e
Karp, Larry
c0e2efad-f4e6-4fb9-9630-aaa8cf37b72e
Van Long, Ngo
6e15af1c-466c-4625-80b1-709d30b0dcc3
Hartwick, John M.
8294a082-49ef-4535-95e2-0ec151ae075e
Karp, Larry
c0e2efad-f4e6-4fb9-9630-aaa8cf37b72e
Van Long, Ngo
6e15af1c-466c-4625-80b1-709d30b0dcc3

Hartwick, John M., Karp, Larry and Van Long, Ngo (2002) Depreciation rules and value invariance with extractive firms. Journal of Economic Dynamics and Control, 26 (1), 99-116. (doi:10.1016/S0165-1889(00)00019-1).

Record type: Article

Abstract

The application of Samuelson's theorem on value invariance to the case of intertemporally optimizing firms is shown to require a judiciously chosen economic depreciation formula which depends on both current stock and current flow variables, in order to prevent the firms from changing their actions in the face of the tax regime. We illustrate by deriving depreciation rules which achieve non-distortingness of actions and value-invariance for resource-extracting firms.

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More information

Published date: 2002
Additional Information: JEL classification codes: H25; D92

Identifiers

Local EPrints ID: 39690
URI: http://eprints.soton.ac.uk/id/eprint/39690
ISSN: 0165-1889
PURE UUID: d24c050f-f39e-47d9-9e1b-24ce62da6c47

Catalogue record

Date deposited: 29 Jun 2006
Last modified: 15 Mar 2024 08:16

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Contributors

Author: John M. Hartwick
Author: Larry Karp
Author: Ngo Van Long

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