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Optimal Taxation and Transboundary Externalities - Are Endogenous World Market Prices Important?

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

This paper concerns income and commodity taxation in a multi-jurisdictional

framework with transboundary environmental damage. We assume that each jurisdiction

is large in the sense that its government is able to influence the world

market prices via public policy. In such a framework, a noncooperative Nash equilibrium

does not only imply that the commodity tax on the externality-generating

good is inefficiently low seen from the perspective of global well-being; it also

means that the marginal income tax rate is inefficiently high, and that too much

resources are spent on public goods. With the noncooperative Nash equilibrium

as a starting point, we also consider the welfare effects of policy coordination with

respect to taxation and public expenditures.

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Publisher Info
Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 699.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 29 pages
Date of creation: 20 Nov 2006
Date of revision:
Handle: RePEc:hhs:umnees:0699

Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Email:
Web page: http://www.econ.umu.se/
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Related research
Keywords: Trade and Environment; Optimal Taxation; Externalities;

Find related papers by JEL classification:
F18 - International Economics - - Trade - - - Trade and Environment
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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References listed on IDEAS
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  1. Aronsson, Thomas & Jonsson, Thomas & Sjögren, Tomas, 2006. "Environmental Policy and Optimal Taxation in a Decentralized Economic Federation," UmeÃ¥ Economic Studies 669, Umeå University, Department of Economics. [Downloadable!]
  2. Thomas Aronsson, 1999. "On Cost Benefit Rules for Green Taxes," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(1), pages 31-43, January. [Downloadable!] (restricted)
  3. 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)
    Other versions:
  4. 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)
  5. Thomas Aronsson Aronsson & Thomas Jonsson & Tomas Sjögren, 2006. "Environmental Policy and Optimal Taxation in a Decentralized Economic Federation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 437-454, September. [Downloadable!] (restricted)
  6. Nicole Gürtzgen & Michael Rauscher, 2000. "Environmental Policy, Intra-Industry Trade and Transfrontier Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(1), pages 59-71, September. [Downloadable!] (restricted)
  7. Bovenberg, A Lans & Goulder, Lawrence H, 1996. "Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses," American Economic Review, American Economic Association, vol. 86(4), pages 985-1000, September. [Downloadable!] (restricted)
    Other versions:
  8. Helmuth Cremer & Firouz Gahvari, 2005. "Environmental Taxation in Open Economies: Unilateralism or Partial Harmonization," Southern Economic Journal, Southern Economic Association, vol. 72(2), pages 352–371, October.
  9. 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)
  10. Parry, Ian & Goulder, Lawrence & Williams III, Roberton, 1997. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Discussion Papers dp-97-18-rev, Resources For the Future. [Downloadable!]
    Other versions:
  11. de Bovenberg, A Lans & Mooij, Ruud A, 1994. "Environmental Levies and Distortionary Taxation," American Economic Review, American Economic Association, vol. 84(4), pages 1085-89, September. [Downloadable!] (restricted)
  12. Van Der Ploeg, F. & De Zeeuw, A.J., 1990. "International Aspects Of Pollution Control," Papers 9065, Tilburg - Center for Economic Research.
  13. 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)
  14. 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)
  15. Conconi, Paola, 2003. "Green lobbies and transboundary pollution in large open economies," Journal of International Economics, Elsevier, vol. 59(2), pages 399-422, March. [Downloadable!] (restricted)
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