Environmental policy, public goods, and the marginal cost of public funds
AbstractIf private goods are perfect substitutes for public goods and environmental quality, greener preferences reduce employment, raise abatement, and improve environmental quality. If the elasticity of substitution between private goods and leisure exceeds one, the tax rate increases, thereby reducing private consumption. However, if labor supply bends backwards, private utility rises while the tax rate and public consumption fall. With imperfect substitution between private and public consumption, greener policies boost labor supply if the substitution elasticity between private and public consumption and the elasticity of the effectiveness of public abatement are small and the labor supply curve bends backwards. Copyright 1994 by Royal Economic Society.
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Bibliographic InfoPaper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-152984.
Date of creation: 1994
Date of revision:
Publication status: Published in Economic Journal (1994) v.104, p.444-454
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Other versions of this item:
- van der Ploeg, Frederick & Bovenberg, A Lans, 1994. "Environmental Policy, Public Goods and the Marginal Cost of Public Funds," Economic Journal, Royal Economic Society, vol. 104(423), pages 444-54, March.
- Van Der Ploeg, F. & Bovenberg, A.L., 1993. "Environmental Policy, Public Goods and the Marginal Cost of Public Funds," Papers 9345, Tilburg - Center for Economic Research.
- Ploeg, F. van der & Bovenberg, A.L., 1993. "Environmental policy, public goods and the marginal cost of public funds," Discussion Paper 1993-45, Tilburg University, Center for Economic Research.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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