The paper surveys the literature on optimal taxation with emphasis on intermediate goods, or, more specific, freight (road) transport. There are two models frequently used, first, the one emanated from Diamond & Mirrlees' (1971) paper, where the production efficiency lemma made it clear that intermediate goods was not to be taxed. And, second, the Ramsey-Boiteux model where a cost-of-service regulation imposes a budget constraint for the regulated firm. In the latter model, in contrast to the first, freight transports (intermediate goods) are to be taxed in the Ramsey tradition, and thus trades the production efficiency lemma against a budget restriction. The paper also discusses welfare effects due to environmental tax reforms, with emphasis to what has become to known as the double dividend hypothesis. Finally, administrative costs in the context of optimal taxation is touched upon, a subject that is to a large degree repressed in optimal tax theory.
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Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number
2006:3.
Length: 43 pages Date of creation: 01 Jun 2006 Date of revision: Handle: RePEc:hhs:vtiwps:2006_003
Contact details of provider: Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden Phone: +46-13-20 40 00 Fax: +46-13-14 14 36 Email: Web page: http://www.vti.se/tek More information through EDIRC
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References listed on IDEAS 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.:
Dixit, Avinash, 1985.
"Tax policy in open economies,"
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 6, pages 313-374
Elsevier.
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