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Environmental Costs Paid by the Polluter or the Beneficiary? The Case of CERCLA and Superfund

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  • Don Fullerton
  • Seng-Su Tsang

Abstract

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980 follows the "polluter pays" principle by placing retroactive liability on responsible firms. Yet this cost is borne by current shareholders who did not benefit from past low-cost waste management. This paper introduces a "beneficiary pays" principle that burdens consumers who benefited from lower prices. An input-output model is developed to calculate the effects of alternative tax rules on output prices. We find: (1) that the increase in commodity prices contributed by current Superfund taxes is only a small fraction of the price increase that would have fully covered the cost of controlling hazardous waste; and (2) current Superfund taxes do not raise the prices of goods associated with the most pollution.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4418.

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Date of creation: Aug 1993
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Handle: RePEc:nbr:nberwo:4418

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Cited by:
  1. Don Fullerton, 1996. "Why Have Separate Environmental Taxes?," NBER Chapters, in: Tax Policy and the Economy, Volume 10, pages 33-70 National Bureau of Economic Research, Inc.

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