ad valorem tax


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ad valorem tax

[¦ad və¦lȯr·əm ′taks]
(petroleum engineering)
Property tax for oil-producing properties, assessed at a flat rate for each net barrel of oil produced.
References in periodicals archive ?
Likewise, the monopolist's muted reaction to a demand shock reduces the policy-maker's need to rely on the self-adjusting nature of the ad valorem tax.
The welfare comparisons among the three policies differ when supply, rather than demand, is subject to random shocks, largely because of the behavior of the ad valorem tax.
In contrast to the quota and specific tax, the ad valorem tax performs quite differently when supply, rather than demand, is random.
The specific tax thus always dominates the ad valorem tax under supply uncertainty and is preferred to the quota for relatively flat marginal damage functions.
In addition, we have shown that there always exists an intermediate range of marginal damage slopes over which the ad valorem tax is preferred.
An ad valorem tax attains the highest expected welfare under some conditions; it also avoids the possibility of producing the lowest possible expected welfare, a chance that exists with both the specific tax and the quota.
If the major uncertainty in a market concerns the level of supply, however, the ad valorem tax appears to be a poor policy choice.
Our results also indicate that computing the optimal ad valorem tax rate may be rather complicated, since (unlike the specific tax or quota) it differs from the policy that is optimal when the expected outcome holds for sure, even assuming linear functions.
This appendix illustrates the derivation of the optimal ad valorem tax rates found in sections II and III of the text.
3) for t yields the formula for the optimal ad valorem tax [t.
where [MATHEMATICAL EXPRESSION NOT REPRODUCIBLE IN ASCII] denotes the monopoly equilibrium quantity with the ad valorem tax r in place.
The ad valorem tax dominates the specific tax when [[Sigma].