Implementing optimal taxes using tradable share permits
AbstractThis paper presents a simple system for efficient regulation under asymmetric information. Each firm's income is controlled by a tax that depends on the firm's own output and on a parameter construed as a share permit. These “shares of total expected output” lower a firm's tax burden and are acquired in a competitive market. By employing this scheme, the planner only requires knowledge of marginal damage to induce the first-best outcome. Relative to a traditional cap-and-trade approach the system increases expected social welfare.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 64 (2012)
Issue (Month): 3 ()
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Web page: http://www.elsevier.com/locate/inca/622870
Asymmetric information; Taxation; Tradable permits;
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