Stability of Rents and Returns as a Source of Internal Financing : Evidence from Appalachian Coal Producers

The role of steam coal was constrained by the Kyoto Protocol and the Copenhagen Climate Summit which call for reduced emissions of green house gases and related measures. These agreements increase the importance in properly managing emissions. Coupled with rapidly increasing demand from China and India, a study on the rents of the Appalachian coal mines is as important as it is timely. In this paper, we show that response surfaces of producers' surpluses are nonlinear with respect to changes in any parameters. They are closely related to a given flow pattern in which only m n-l positive coal flows prevail. Only when the flow patterns change does the response surfaces of the producers' surplus undergo structural changes. Production taxes decrease supplier's welfare. Furthermore the result of the Friedman test indicates that the relative welfare position, measured in terms of producers' rents, differs significantly in our simulation