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Environmental taxation: Pigouvian or Leviathan?

Author

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  • Isabelle Cadoret

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

  • Emma Galli

    (UNIROMA - Università degli Studi di Roma "La Sapienza" = Sapienza University [Rome])

  • Fabio Padovano

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper empirically examines which type of fiscal levies are environmental taxes, by analyzing how governments actually use them. The theoretical literature is polarized between two alternative interpretations of environmental taxes: the Pigouvian and the Leviathan hypotheses, each leading to alternative testable hypotheses. We test them on a sample where the analysts' discretionary evaluations are minimal, the EU-28 countries that committed themselves to correcting a negative environmental externality, the greenhouse gas emissions, by 2020. The estimates lend support to the strict Pigouvian hypothesis, while the Leviathan hypothesis appears less consistent with the data.

Suggested Citation

  • Isabelle Cadoret & Emma Galli & Fabio Padovano, 2021. "Environmental taxation: Pigouvian or Leviathan?," Post-Print hal-02544523, HAL.
    • Handle: RePEc:hal:journl:hal-02544523
    DOI: 10.1007/s40812-020-00149-8
    Note: View the original document on HAL open archive server: https://univ-rennes.hal.science/hal-02544523
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    References listed on IDEAS

    as
    1. Catherine Benjamin & Isabelle Cadoret & Marie-Hélène Hubert, 2015. "The European Climate Policy is Ambitious: Myth or Reality?," Revue d'économie politique, Dalloz, vol. 125(5), pages 731-753.
    2. Ordás Criado, C. & Valente, S. & Stengos, T., 2011. "Growth and pollution convergence: Theory and evidence," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 199-214, September.
    3. Kirchgassner, Gebhard & Schneider, Friedrich, 2003. "On the Political Economy of Environmental Policy," Public Choice, Springer, vol. 115(3-4), pages 369-396, June.
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    5. Conconi, Paola, 2003. "Green lobbies and transboundary pollution in large open economies," Journal of International Economics, Elsevier, vol. 59(2), pages 399-422, March.
    6. Agnar Sandmo, 2011. "The Scale and Scope of Environmental Taxation," Chapters, in: Emilio Albi & Jorge Martinez-Vazquez (ed.), The Elgar Guide to Tax Systems, chapter 8, Edward Elgar Publishing.
    7. Chang, Chun Ping & Berdiev, Aziz N., 2011. "The political economy of energy regulation in OECD countries," Energy Economics, Elsevier, vol. 33(5), pages 816-825, September.
    8. Congleton, Roger D, 1992. "Political Institutions and Pollution Control," The Review of Economics and Statistics, MIT Press, vol. 74(3), pages 412-421, August.
    9. Chang, Ting-Huan & Huang, Chien-Ming & Lee, Ming-Chih, 2009. "Threshold effect of the economic growth rate on the renewable energy development from a change in energy price: Evidence from OECD countries," Energy Policy, Elsevier, vol. 37(12), pages 5796-5802, December.
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    Cited by:

    1. Amitrajeet A. Batabyal & Hamid Beladi, 2023. "Can Leviathan City Governments Use Tax Policy to Attract the Creative Class?," The Review of Regional Studies, Southern Regional Science Association, vol. 53(3), pages 236-246.
    2. Mardones, Cristian & Mena, Camilo, 2020. "Effects of the internalization of the social cost of global and local air pollutants in Chile," Energy Policy, Elsevier, vol. 147(C).

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    More about this item

    Keywords

    Environmental taxes; Pigouvian taxation; Leviathan government; GHG reduction; Arellano–Bond GMM;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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