A Competitive Sector Depletion Allowance in the Context of an Intertemporal Dominant-Firm Model
(1979) , 19 pages
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- Authors
- Abstract
- (en) A frequently stated objective of non-cartel countries is to reduce their dependence on foreign supplies of a strategic exhaustible resource. One measure seriously discussed by government officials (and representatives of extractive industries) involves the provision (or liberalization) of depletion allowances aimed at home-country extractive firms dealing in the cartelized product. When a depletion allowance is considered in the context of a dynamic dominant-firm model, it is found that short-run supply constraints may be lifted (and thus independence assured) only at the expense of longer-run dependence on foreign reserves. Further results warn that this policy instrument may involve significant costs and tradeoffs likely to reduce its ability to achieve the desired objective.
- Affiliations
Citations
Melese d’Hospital, F. (1979). A Competitive Sector Depletion Allowance in the Context of an Intertemporal Dominant-Firm Model (Working Papers Institut des sciences économiques 7914). https://hdl.handle.net/2078.5/278802