PUBLICATION Journal article

On the optimal taxation of common-pool resources

Recent research developments in common-pool resource models emphasize the importance of links with ecological systems and the presence of non-linearities, thresholds and multiple steady states.In a recentpaper Kossiorisetal.(2008) develop a methodology for deriving feedback Nash equilibria for non-linear differential games and apply this methodology to a common-pool resource model of a lake where pollution corresponds to benefits and at the same time affects the ecosystem services. This paper studies the structure of optimal state-dependent taxes that steer the combined economic-ecological system towards the trajectory of optimal management, and provides an algorithm for calculating such taxes.

Kossioris, G., M. Plexousakis, A. Xepapadeas, and A. de Zeeuw. 2011. On the optimal taxation of common-pool resources. Journal of Economic Dynamics and Control 35(11):1868-1879.