Depreciation rules and value invariance with extractive firms

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).


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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.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1016/S0165-1889(00)00019-1
Additional Information: JEL classification codes: H25; D92
ISSNs: 0165-1889 (print)
Related URLs:
Subjects: H Social Sciences > HB Economic Theory
Divisions : University Structure - Pre August 2011 > School of Social Sciences > Economics
ePrint ID: 39690
Accepted Date and Publication Date:
Date Deposited: 29 Jun 2006
Last Modified: 31 Mar 2016 12:09

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