3 présentations

• 
  11h15 - 11h40

  Optimal Taxation in a Common Resource Oligopoly Game

  • Michele Bisceglia, prés., Università di Bergamo

  In this paper, we investigate the optimal taxation policy in a differential oligopoly game where the competing firms share the access to a productive renewable resource. We show that, in a linear Feedback Nash Equilibrium of the game, a linear Markov tax, imposed on the output, and specified as an affine function of the available resource stock, leads the competing firms to produce the socially optimal quantities over time, thus overcoming the dynamic interplay between the tragedy of the commons and the firms' market power. The optimal tax turns out to be independent on the resource stock in a monopoly, and it cannot be defined in a duopoly.

• 
  11h40 - 12h05

  Limit pricing, substitute development and equilibrium carbon taxation

  • Niko Jaakkola, prés., ifo Institut

  I develop a bivariate differential game between a monopolist selling an exhaustible and polluting fossil fuel, and a buyer of the resource able to invest into reducing the unit production cost of a non-polluting perfect substitute to the resource. With inelastic demand, the Markov-perfect Nash equilibrium is unique in continuous strategies and can be characterised analytically. I demonstrate that the equilibrium features carbon taxes which reflect the social cost of carbon were emissions stopped immediately. While emissions continue, this cost is strictly below the Pigovian carbon tax if pollution damages are convex. Thus, equilibrium taxes cannot credibly internalise the social cost of pollution, and they cannot capture resource rents. The fossil fuel shuts down efficiently, however, i.e. when the social value of the resource disappears.

  If carbon taxes are not available, the importer eventually resorts to a crash R&D programme in order to bring forward the date on which fossil extraction ends, and to lock a larger fraction of the fossil reserve underground forever. If medium-term climate impacts are severe, and the end of the fossil era far enough, then initial R&D efforts may be lowered because of climate change, as lower substitute costs push up oil demand in the short run.

• 
  12h05 - 12h30

  Second-Best Taxation for a Polluting Monopoly with Abatement Investment

  • Santiago J. Rubio, prés., University of Valencia

  This paper characterizes the optimal tax rule to regulate a polluting monopoly when the firm has the possibility of investing in an abatement technology and the environmental damages are caused by a stock pollutant. The optimal policy is given by the stagewise feedback Stackelberg equilibrium of a dynamic policy game between a regulator and a monopolist. The regulator playing as the leader chooses an emission tax to maximize net social welfare, and the monopolist acting as the follower selects the output and the investment in abatement technology to maximize profits. We find that the optimal tax has two components. The first component is negative and equal to the gap between the marginal revenue and the price caused by the firm market power; the second component is given by the difference between the social and private shadow prices of the pollution stock. Considering a linear-quadratic model we show that if marginal environmental damages are constant, the difference between social and private shadow prices is positive and the optimal policy consists of taxing emissions at a constant rate if the marginal damages are large enough. However, if the marginal environmental damages are increasing the numerical exercises carried out show that this difference is negative at the steady state and the optimal policy gives the firm a subsidy when approaching the steady state regardless of the importance of the environmental damages. This result is explained by the negative effect that abatement technology accumulation has on the tax. Finally, it can be pointed out that although both models yield different predictions about the sign of the optimal policy the dynamics is globally stable for both cases.