Optimal Extraction of Exhaustible Resources under Resource Tax Reform in China

This paper discusses the impacts of resource tax reform on the optimal resources extraction in China when the time of resource tax reform and the ways of taxes levy are uncertain. Based on the assumption that the process for accepting resource tax reform follows Poisson process, we first divide resource extraction into two processes by using the idea of dynamic planning. We then apply the optimal control theory to build dynamic optimal extraction model and give the optimal extraction path by solving the model. The results show that: (1) when the extent of uncertain is fixed, the initial resources extraction and extraction rate increase by increasing the taxes rate; (2) when taxes rate is fixed, extraction rate increase by increasing uncertainty of the reform, but initial resources extraction is related with taxes rate.