Optimal petroleum taxation subject to mobility and information constraints

Abstract

Two recent noticeable international developments in the petroleum industry have been mergers and acquisitions, and the opening of new oil producing provinces for transnational oil companies. Both factors contribute to sharpening the international competition between various petroleum provinces in attracting the most competent companies. In addition, we have experienced that the transnational companies have changed their strategies. To an increasing extent they seem to choose a focusing strategy. Many functions are outsourced and one tries to concentrate the activity to a limited number of core countries, and even particular geological structures within the individual countries. The article discusses the implications of the new setting for optimal tax and regulatory design.