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VIF Vivit: Reply to Henderson

Henderson's main conclusions are incorrect. Oil is a fungible substance, and therefore price discrimination is not possible. (Some argue, however, that there is evidence the world oil market is segmented, and that a degree of price discrimination therefore is possible; Weiner, 1984). Consequently, a variable import fee (VIF) imposed on imported oil will shield the US economy from short-lived price collapses, as intended - and at the same time garner modest revenues for the Treasury.

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Energy Specializations: Energy and the Economy – Energy as a Productive Input; Energy and the Economy –Economic Growth and Energy Demand; Energy and the Economy – Resource Endowments and Economic Performance; Energy and the Economy – Energy Shocks and Business Cycles

JEL Codes: Q40: Energy: General, Q41: Energy: Demand and Supply; Prices, Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling, D42: Market Structure, Pricing, and Design: Monopoly, Q35: Hydrocarbon Resources, L11: Production, Pricing, and Market Structure; Size Distribution of Firms, L71: Mining, Extraction, and Refining: Hydrocarbon Fuels, Q32: Exhaustible Resources and Economic Development, L13: Oligopoly and Other Imperfect Markets

Keywords: Variable oil import fee, US, Oil supply, Energy policy

DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No4-11

Published in Volume 10, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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