Pat Gunning wrote: >----------------- HES POSTING ----------------- >Doug Mackenzie wrote: >> >>Such things are not fixed in stone, and vary according >>to context. I suspect that a land/resource tax might >>generate "enough" revenue in Saudi Arabia. > > >If a tax on oil was anticipated, it would reduce >the incentive to search for oil. This implies a linear relationship between incentives and production. So that if the incentive at $50/barrel is X, then the incentive at $100/barrel is 2X., and at $150 it is 3X, etc. So, is there no point of diminishing returns on incentives? The real question is whether incentives are unique among all economic phenomena in that they do not have a diminishing marginal utility. I rather doubt that. John C. M?daille