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Do Monopolies Justifiably Fear Environmental Tax Reforms?

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  • Thorsten Bay¡nd¡r-Upmann

Abstract

It is often argued that without tax-exemptions for the production sector environmental tax reforms substantially reduce profits and endanger employment. We challenge this view and investigate the consequences of both a small and alarge tax reform in the case of a monopoly. We show that these suspected effects are unlikely to emerge. Rather the contrary, for a wide range of ex ante tax systems, profits and employ-ment of non-polluting factors increase - and, in this sense, together with a positive environmental effect, a double, or evena triple dividend can often be attained. What we should, however, be concerned about is the effect of a green tax reform on the demand for environmentally harmful factors of production. When the double dividend fails, it frequently does so because the environmental dividend is lost.

Suggested Citation

  • Thorsten Bay¡nd¡r-Upmann, 2000. "Do Monopolies Justifiably Fear Environmental Tax Reforms?," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(4), pages 459-484, August.
  • Handle: RePEc:mhr:finarc:urn:sici:0015-2218(200108)57:4_459:dmjfet_2.0.tx_2-e
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    References listed on IDEAS

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    Cited by:

    1. Requate, Till, 2005. "Environmental Policy under Imperfect Competition: A Survey," Economics Working Papers 2005-12, Christian-Albrechts-University of Kiel, Department of Economics.
    2. Udo Ebert, 2007. "Redistributional Preference in Environmental Policy," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 63(4), pages 548-562, December.

    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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