ABSTRACT
The optimal solution for the authorities is to pursue a credible, predictable and time-consistent tax policy, which for existing fields will mean carrying forth the level of tax that was held out to the companies at the time of the investment. The relevant framework of analysis is strategic tax competition, i.e. in designing petroleum taxes, the Norwegian government has to take into account that Norwegian petroleum taxes may affect petroleum tax design in other extraction countries. The participation constraints impose defined restrictions on taxation, licensing policy and regulation. Less profitable fields call for more lenient taxation for the country to maintain its competitiveness in attracting the most competent and internationally mobile oil companies. The potential for taxation is therefore to be found in the following relation: the petroleum rent less the mobility rent and the information rent. As regards investments in new fields, the companies' mobility comes into play in full.
