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Environmental Quality, Medical Care Demand and Environmental Tax Interactions

  • Çağatay Koç


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    Assuming that improvements in environmental quality lead to lower demand for medical care, it has been shown that general-equilibrium interactions with the tax-distorted labor market reduce the benefits from such improvements, and thus lower the second-best optimal environmental tax. This paper provides some insights on how the link between environmental quality, individual’s health capital, and the demand for medical care affects the analysis of pollution taxes. The paper develops structural conditions under which improvements in environmental quality decrease/increase the demand for medical care and discusses their implications for environmental tax interactions. Copyright Springer Science+Business Media, Inc. 2007

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    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 37 (2007)
    Issue (Month): 2 (June)
    Pages: 431-443

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    Handle: RePEc:kap:enreec:v:37:y:2007:i:2:p:431-443
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    1. Jesse Schwartz & Robert Repetto, 2000. "Nonseparable Utility and the Double Dividend Debate: Reconsidering the Tax-Interaction Effect," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(2), pages 149-157, February.
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    3. Bovenberg, A.L. & Goulder, L.H., 1996. "Optimal environmental taxation in the presence of other taxes : General equilibrium analyses," Other publications TiSEM 5d4b7517-c5c8-4ef6-ab76-3, Tilburg University, School of Economics and Management.
    4. 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.
    5. McAvinchey, Ian D. & Yannopoulos, Andreas, 1993. "Elasticity estimates from a dynamic model of interrelated demands for private and public acute health care," Journal of Health Economics, Elsevier, vol. 12(2), pages 171-186, July.
    6. �ağatay Koç, 2004. "The productivity of health care and health production functions," Health Economics, John Wiley & Sons, Ltd., vol. 13(8), pages 739-747.
    7. Valentino Dardanoni & Alan Wagstaff, 1987. "Uncertainty and the demand for medical care," Working Papers 028chedp, Centre for Health Economics, University of York.
    8. Williams, Roberton III, 2002. "Environmental Tax Interactions when Pollution Affects Health or Productivity," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 261-270, September.
    9. Feldstein, Martin S, 1971. "Hospital Cost Inflation: A Study of Nonprofit Price Dynamics," American Economic Review, American Economic Association, vol. 61(5), pages 853-72, December.
    10. Parry Ian W. H., 1995. "Pollution Taxes and Revenue Recycling," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages S64-S77, November.
    11. Williams III, Roberton C., 2003. "Health effects and optimal environmental taxes," Journal of Public Economics, Elsevier, vol. 87(2), pages 323-335, February.
    12. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459 Elsevier.
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