Second-Best Pollution Taxation and Environmental Quality

Publication Type  Preprints
Author  Thomas Gaube
Year of Publication  2005
Issue  2005/09
Abstract  This paper deals with second-best pollution taxation by investigating allocations instead of the corresponding tax rates. Assuming certain restrictions on utility and that the marginal revenue from environmental taxation is positive, it is shown that environmental quality is higher in second best where only distortionary taxes are used to finance public expenditures than in the first-best optimum where lump-sum taxes are available.
Pagination  18
Publisher  Max Planck Institute for Research on Collective Goods
Place Published  Bonn
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Published in:  Frontiers of Economic Analysis & Policy, vol. 1, pp. 1-18, 2005
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