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INVESTIGATING TAX DISTORTIONS: AN APPLIED MODEL OF PETROLEUM EXPLORATION AND EXTRACTION DECISIONS
Article first published online: 10 JUL 2012
Copyright © 2012 Wiley Periodicals, Inc.
Natural Resource Modeling
Volume 26, Issue 1, pages 66–90, February 2013
How to Cite
BLAKE, A. J. (2013), INVESTIGATING TAX DISTORTIONS: AN APPLIED MODEL OF PETROLEUM EXPLORATION AND EXTRACTION DECISIONS. Natural Resource Modeling, 26: 66–90. doi: 10.1111/j.1939-7445.2012.00121.x
- Issue published online: 5 FEB 2013
- Article first published online: 10 JUL 2012
- Received by the editors on 19th August 2011. Accepted 3rd April 2012.
- Petroleum model;
- petroleum taxation;
- distortions due to taxation
Abstract A numerical model is proposed for the testing of distortions caused by petroleum fiscal systems on the exploration and extraction activities of a profit-maximizing firm. Traditional models have not been capable of testing for the distortions caused by the complex tax structures most often used by governments. Two tax combinations, as well as certain other taxes, are analyzed for distortions in the model. The model is parameterized using generic data because specific jurisdictions are not considered. The distortions due to rentals and royalties are as expected by theory. Property taxes show a new distortion result where production tilting is ambiguous.