Environmental taxes in the long run
AbstractThe efficiency of the Pigouvian tax suggests that price-based regulation is the proper benchmark for efficient regulation. However, results due to Carlton and Loury (1980, 1986) question this; when harm depends on scale effects a pure Pigou tax is inefficient regulation in the long run. In this note we make precise that there is an efficient tax scheme for controlling harm as long as social optimum exists. In particular, the efficient tax scheme is based on a tax rate equal to marginal harm. Hence, price regulation is the right benchmark for regulation even in the presence of scale effects in the harm function. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2013-29.
Date of creation: 2013
Date of revision:
externalities; scale effects; Pigou-taxes;
Find related papers by JEL classification:
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- D62 - Microeconomics - - Welfare Economics - - - Externalities
This paper has been announced in the following NEP Reports:
- NEP-ACC-2013-05-11 (Accounting & Auditing)
- NEP-ALL-2013-05-11 (All new papers)
- NEP-ENE-2013-05-11 (Energy Economics)
- NEP-ENV-2013-05-11 (Environmental Economics)
- NEP-PBE-2013-05-11 (Public Economics)
- NEP-RES-2013-05-11 (Resource Economics)
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.:
- Kazuhiko Kato, 2011. "Emission quota versus emission tax in a mixed duopoly," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(1), pages 43-63, January.
- Baumol, William J, 1979. "Quasi Optimality: The Price We Must Pay for a Price System," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 578-99, June.
- Roberts, Marc J. & Spence, Michael, 1976. "Effluent charges and licenses under uncertainty," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 193-208.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.