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Measuring the Primary Impacts of Severance Taxation: A Spatial Equilibrium Approach

Published online by Cambridge University Press:  10 May 2017

Jill L. Findeis ,
James S. Shortle  and
Virginia M. Kibler
Jill L. Findeis
Affiliation:
Pennsylvania State University
James S. Shortle
Affiliation:
Pennsylvania State University
Virginia M. Kibler
Affiliation:
Pennsylvania State University
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Abstract

A spatial equilibrium model is used to quantify the effects of a severance tax on the Pennsylvania coal market. Two regions are identified: the Pennsylvania Market Area and an import/export region. The impacts on prices and quantities of coal supplied and demanded are found to be small. Little of the tax is exported from Pennsylvania, with a high proportion of the tax being passed back to Pennsylvania coal producers. Although the tax revenue exceeds the welfare losses in Pennsylvania, this result is very sensitive to the magnitude of the Pennsylvania own-price demand elasticity.

Type
Articles
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 17 , Issue 1 , April 1988 , pp. 15 - 22
Copyright
Copyright © 1988 Northeastern Agricultural and Resource Economics Association 

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Footnotes

The authors gratefully acknowledge the helpful comments made by Charles Abdalla, Donald Epp, and anonymous reviewers of the Journal. The article is published as Journal Series Article No. 7846 of the Pennsylvania Agricultural Experiment Station.

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