Efficiency-Inducing Taxation for a Monopolistically Supplied Depletable Resource

Ted Bergstrom, University of California, Santa Barbara
John Cross, University of Michigan
Dick Porter, University of Michigan

Abstract

We show that for a depletable resource, if the competitive time path of prices is known, and if the profit function is concave, then there is an easily described time path of taxes and/or subsidies that would induce a monopolist to follow an efficient time path of extraction.