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My point is that if we charge a carbon tax on anyone emitting carbon then carbon users will expierence an increase in costs due to their carbon emitting behavior.  In principle, all other things being equal, the carbon users should have a diminished willingness to buy carbon whether oil, coal, or natural gas.  That diminished willingness to buy carbon should show up in lower bids for commodoties such as oil and natural gas.  Eventually, one might expect the price of carbon commodoties to be lower than they would be otherwise at the point of extraction.  

In other words economic rent would be diminished eventually.  Although the carbon emmisions tax would not be structured explicitly to fall on the economic rent of carbon-based natural resourced, the net effect might be that the collectors of such economic rents would have less to collect.  That is what I mean by a "shifing" of the incidence of the tax.

I am speaking from a purely theoretical perspective and there may be something I am overlooking.  Also, I use the word "eventually" because it might take some time for the effects to work their way through the system, but I am pretty sure that want I am saying would hold in the market.  

by Geonomist on Mon Mar 19th, 2007 at 10:08:48 AM EST
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