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Optimal tariffs on exhaustible resources

Optimal tariffs on exhaustible resources
Optimal tariffs on exhaustible resources
We characterize the Markov perfect equilibria of two games in which oligopsonistic importers of an exhaustible resource confront competitive suppliers who have rational expectations. The games differ only in the timing of moves, or the speed with which participants can adjust their plans. The optimal tariff when sellers move first (are less flexible) differs considerably from that in which buyers move first, and sellers retain more control over intertemporal arbitrage opportunities. If the initial stock is small, buyers suffer a disadvantage from being the first-mover; this is reversed if the stock is large.
0022-1996
285-299
Karp, Larry
c0e2efad-f4e6-4fb9-9630-aaa8cf37b72e
Newbery, David M.
55b82b9e-bbdd-4e9c-85fb-5f7a0d441980
Karp, Larry
c0e2efad-f4e6-4fb9-9630-aaa8cf37b72e
Newbery, David M.
55b82b9e-bbdd-4e9c-85fb-5f7a0d441980

Karp, Larry and Newbery, David M. (1991) Optimal tariffs on exhaustible resources. Journal of International Economics, 30 (3-4), 285-299. (doi:10.1016/0022-1996(91)90023-Y).

Record type: Article

Abstract

We characterize the Markov perfect equilibria of two games in which oligopsonistic importers of an exhaustible resource confront competitive suppliers who have rational expectations. The games differ only in the timing of moves, or the speed with which participants can adjust their plans. The optimal tariff when sellers move first (are less flexible) differs considerably from that in which buyers move first, and sellers retain more control over intertemporal arbitrage opportunities. If the initial stock is small, buyers suffer a disadvantage from being the first-mover; this is reversed if the stock is large.

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Published date: May 1991

Identifiers

Local EPrints ID: 32976
URI: http://eprints.soton.ac.uk/id/eprint/32976
DOI: doi:10.1016/0022-1996(91)90023-Y
ISSN: 0022-1996
PURE UUID: 405781c1-68f8-4230-8274-09e159ffa81d

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Date deposited: 10 Dec 2007
Last modified: 15 Mar 2024 07:40

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Contributors

Author: Larry Karp
Author: David M. Newbery

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