Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/192228
Authors: 
Berg, Elin
Kverndokk, Snorre
Rosendahl, Knut Einar
Year of Publication: 
1999
Series/Report no.: 
Discussion Papers No. 245
Abstract: 
In this paper we focus on how an international climate treaty will influence the exploration of oil in Non-OPEC countries. We present a numerical intertemporal global equilibrium model for the fossil fuel markets. The international oil market is modelled with a cartel (OPEC) and a competitive fringe on the supply side, following a Nash-Cournot approach. An initial resource base for oil is given in the Non-OPEC region. However, the resource base changes over time due to depletion, exploration and discovery. When studying the effects of different climate treaties on oil exploration, two contrasting incentives apply. If an international carbon tax is introduced, the producer price of oil will drop compared to the reference case. This gives an incentive to reduce oil production and exploration. However, the oil price may increase less rapidly over time, which gives an incentive to expedite production, and exploration. In fact, in the case of a rising carbon tax we find the last incentive to be the strongest, which means that an international climate treaty may increase oil exploration in Non-OPEC countries for the coming decades.
Subjects: 
International Climate Treaties
Exhaustible Resources
Optimal Oil Exploration
JEL: 
H23
Q30
Q40
Document Type: 
Working Paper

Files in This Item:
File
Size
275.87 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.