Cooperative and Non-Cooperative Equilibrium Consumption Taxes in the Presence of Cross-Border Pollution
AbstractWe consider a two small open economies model with cross-border pollution that is generated from consumption. Within this framework we examine i) the non-cooperative equilibrium consumption taxes and compare them to when pollution is only local, ii) the cooperative equilibrium consumption taxes and we compare them to the non-cooperative tax rates, and iii) cases where cooperative taxes are different between countries. In this framework, tax harmonization may not be the optimal policy if, for example, pollution per unit of consumption differ between countries. Many results of the paper depend on the relationship in consumption (i.e., complementarity or substitutability) between pollution and the polluting good.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4501.
Date of creation: 2013
Date of revision:
consumption taxes; cross-border pollution; non-cooperative and cooperative equilibrium;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
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