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Article
On capturing oil rents with a national excise tax
American Economic Review (1982)
  • Ted Bergstrom, University of California, Santa Barbara
Abstract

This paper argues that since the supply of oil in the ground is inelastic, the incidence of a sales tax on oil, maintained forever at a fixed rate, would fall entirely on the oil-suppliers. In the world economy, however, the elasticity of supply of oil to a single country depends on that country's imports as a share of world output and on the elasticity of demand for that country. The paper calculates optimal tax rates for a country as a function of these variables and estimates optimal oil tax rates for the U.S., for some OECD countries separately, and for the U.S. plus the OECD collectively. Current U.S. tax rates are shown to be far below optimal values.

Keywords
  • oil,
  • optimal taxation,
  • excise tax,
  • international trade
Disciplines
Publication Date
March 1, 1982
Citation Information
Ted Bergstrom. "On capturing oil rents with a national excise tax" American Economic Review Vol. 72 Iss. 1 (1982)
Available at: http://works.bepress.com/ted_bergstrom/16/