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Environmental Policy and Optimal Taxation in a Decentralized Economic Federation

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Author Info
Aronsson, Thomas () (Department of Economics, Umeå University)
Jonsson, Thomas () (Department of Economics, Umeå University)
Sjögren, Tomas () (Department of Economics, Umeå University)
Abstract

This paper deals with environmental policy in an economic federation, where each national government faces a mixed tax problem. We assume that the federal government sets emission targets, which are implemented at the national level. We also assume that the economic federation is decentralized, meaning that the national governments are first movers vis-a-vis the federal government. Our results show that each country uses it policy instruments, at least in part, to influence the emission target. This has several implications; first, the commodity taxes do not satisfy the so called additivity property often emphasized in earlier literature and, second, it provides an argument for using distortionary labor income taxation.

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Publisher Info
Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 669.

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Length: 29 pages
Date of creation: 13 Jan 2006
Date of revision:
Handle: RePEc:hhs:umnees:0669

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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
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Related research
Keywords: Income and commodity taxation; economic federation; environmental policy;

Other versions of this item:

Find related papers by JEL classification:
D62 - Microeconomics - - Welfare Economics - - - Externalities
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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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.:
  1. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen. [Downloadable!] (restricted)
  2. Aronsson, Thomas & Jonsson, Thomas & Sjögren, Tomas, 2004. "Environmental Policy Reforms and the Labor Market in a Global Economy," UmeÃ¥ Economic Studies 629, Umeå University, Department of Economics. [Downloadable!]
  3. Marklund, Per-Olov & Samakovlis, Eva, 2003. "What is Driving the EU Burden-Sharing Agreement: Efficiency or Equity?," UmeÃ¥ Economic Studies 620, Umeå University, Department of Economics.
  4. Thomas Aronsson & Tomas Sjögren, 2004. "Is the Optimal Labor Income Tax Progressive in a Unionized Economy?," Scandinavian Journal of Economics, Blackwell Publishing, vol. 106(4), pages 661-675, December. [Downloadable!] (restricted)
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  5. Caplan, Arthur J. & Cornes, Richard C. & Silva, Emilson C. D., 2000. "Pure public goods and income redistribution in a federation with decentralized leadership and imperfect labor mobility," Journal of Public Economics, Elsevier, vol. 77(2), pages 265-284, August. [Downloadable!] (restricted)
  6. Silva, Emilson C. D. & Caplan, Arthur J., 1997. "Transboundary Pollution Control in Federal Systems," Journal of Environmental Economics and Management, Elsevier, vol. 34(2), pages 173-186, October. [Downloadable!] (restricted)
  7. Clemens Fuest & Bernd Huber, 1997. "Wage bargaining, labor-tax progression, and welfare," Journal of Economics, Springer, vol. 66(2), pages 127-150, June. [Downloadable!] (restricted)
  8. Van Der Ploeg, F. & De Zeeuw, A.J., 1990. "International Aspects Of Pollution Control," Papers 9065, Tilburg - Center for Economic Research.
  9. Caplan, Arthur J. & Silva, Emilson C. D., 1999. "Federal Acid Rain Games," Journal of Urban Economics, Elsevier, vol. 46(1), pages 25-52, July. [Downloadable!] (restricted)
  10. Kothenburger, Marko, 2004. "Tax competition in a fiscal union with decentralized leadership," Journal of Urban Economics, Elsevier, vol. 55(3), pages 498-513, May. [Downloadable!] (restricted)
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  11. Christiansen, Vidar, 1984. "Which commodity taxes should supplement the income tax?," Journal of Public Economics, Elsevier, vol. 24(2), pages 195-220, July. [Downloadable!] (restricted)
  12. Aronsson, Thomas & Blomquist, Sören, 2000. "Optimal Taxation, Global Externalities and Labor Mobility," Working Paper Series 2000:15, Uppsala University, Department of Economics. [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Aronsson, Thomas, 2007. "General Income Taxation, Public Goods and Decentralized Leadership," UmeÃ¥ Economic Studies 715, Umeå University, Department of Economics. [Downloadable!]
  2. Aronsson, Thomas & Persson, Lars & Sjögren, Tomas, 2006. "Optimal Taxation and Transboundary Externalities - Are Endogenous World Market Prices Important?," UmeÃ¥ Economic Studies 699, Umeå University, Department of Economics. [Downloadable!]
  3. Aronsson, Thomas & Sjögren, Tomas & Witterblad, Mikael, 2008. "Optimal Taxation and Asymmetric Information in an Economy with Second-Hand Trade," UmeÃ¥ Economic Studies 732, Umeå University, Department of Economics. [Downloadable!]
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