Is Risk-sharing Taxation in Society's Best Interests if Prices are Log-normally Distributed?

Fraser, R. (2000) Is Risk-sharing Taxation in Society's Best Interests if Prices are Log-normally Distributed? Resources Policy, 26 (4). pp. 219-225. (The full text of this publication is not available from this repository)

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Abstract

This paper contributes to our understanding of the perceived benefits for society of risk-sharing resource taxation. In the particular context of log-normally distributed prices a model is developed which enables comparison of risk-sharing resource taxation with an alternative in determining the overall return to society from auctioning an extraction lease. The main finding of the paper is a potential exception to the general preference for risk-sharing resource taxation if the bidding firms are effectively risk neutral. This exception is illustrated numerically in the context of the impact of increased price uncertainty, but it is shown not to be robust with respect to divergences from risk neutrality in the risk attitudes of firms. Consequently, it is concluded that the choice of risk-sharing resource taxation is likely to be in society's best interests, regardless of the probability distribution of prices.

Item Type: Article
Uncontrolled keywords: Log-normal prices; Risk-sharing; Resource taxation
Subjects: H Social Sciences > HD Industries. Land use. Labor
Divisions: Faculties > Social Sciences > Kent Business School
Depositing User: Robert Fraser
Date Deposited: 31 Aug 2008 18:11
Last Modified: 14 Jan 2010 14:19
Resource URI: http://kar.kent.ac.uk/id/eprint/5182 (The current URI for this page, for reference purposes)
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