An Algorithm for Optimal Pigouvian Taxes Without Benefits Data
AbstractThe Pigouvian prescription to internalize external diseconomies and to achieve the optimum social equilibrium is well known: a unit tax on polluting activities equal to the marginal social damage arising at the after-tax optimal level of activity. If an authority imposes an effluent fee on emissions equal to the marginal social damage, the resulting equilibrium is Pareto-efficient. It has not been possible to translate the Pigouvian dictum into actual because of the problem of quantifying such a tax and its heavy subjective information requirements. This makes the monetary value of the damage difficult to determine. In order to overcome this difficulty, this paper develops a different theoretical approach. The main goal is to provide the environmental authority with an algorithm which allows policy-makers to base decisions on technical data (i.e. firms' production functions) rather than on subjective information (i.e. individuals' utility functions). The paper illustrates advantages offered by this approach, providing some theoretical and practical conditions useful in calculating the optimal tax. Copyright Kluwer Academic Publishers 1999
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 13 (1999)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100263
algorithm; externalities; optimal tax;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephen Smith, 1992. "Taxation and the environment: a survey," Fiscal Studies, Institute for Fiscal Studies, vol. 13(4), pages 21-57, January.
- Miller, Jon R & Lad, Frank, 1984. "Flexibility, learning, and irreversibility in environmental decisions: A bayesian approach," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 161-172, June.
- Wittman, Donald, 1985. "Pigovian taxes which work in the small-number case," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 144-154, June.
- Rousseau, Sandra & Telle, Kjetil, 2010.
"On the existence of the optimal fine for environmental crime,"
International Review of Law and Economics,
Elsevier, vol. 30(4), pages 329-337, December.
- Rousseau, Sandra & Telle, K., 2010. "On the existence of the optimal fine for environmental crime," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/288246, Katholieke Universiteit Leuven.
- Yew-Kwang Ng, 2004. "Optimal Environmental Charges/Taxes: Easy to Estimate and Surplus-yielding," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 28(4), pages 395-408, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.