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Does Commuting Change the ranking of environmental instruments?

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  • Saveyn Bert

    (K.U.Leuven-Center for Economic Studies)

Abstract

This paper studies the income effects of environmental policy in jurisdictions with a common labor market and a heterogeneous population (workers and polluters). A jurisdiction unilaterally improves its local environmental quality, using a subsidy, an environmental tax or command-and-control. In a closed economy, workers and polluters have some kind of a "natural ranking" of instruments for a given environmental objective. We find that commuting across jurisdictions may upset this "natural ranking" of environmental instruments. Further, we see that this inter-jurisdictional commuting exports pollution and the costs of environmental policy, possibly causing strategic behavior.

Suggested Citation

  • Saveyn Bert, 2006. "Does Commuting Change the ranking of environmental instruments?," Energy, Transport and Environment Working Papers Series ete0603, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    • Handle: RePEc:ete:etewps:ete0603
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    References listed on IDEAS

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    1. Braid, Ralph M, 1996. "Symmetric Tax Competition with Multiple Jurisdictions in Each Metropolitan Area," American Economic Review, American Economic Association, vol. 86(5), pages 1279-1290, December.
    2. Gray, Wayne B. & Shadbegian, R.J.Ronald J., 2004. "'Optimal' pollution abatement--whose benefits matter, and how much?," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 510-534, May.
    3. Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-147, March.
    4. Saveyn Bert, 2006. "Are NIMBY's commuters?," Energy, Transport and Environment Working Papers Series ete0604, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    5. 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.
    6. Lawrence H. Goulder & Ian W.H. Parry & Roberton C. Williams III & Dallas Burtraw, 2002. "The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 27, pages 523-554, Edward Elgar Publishing.
    7. Bovenberg, A. Lans & Goulder, Lawrence H., 2002. "Environmental taxation and regulation," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 23, pages 1471-1545, Elsevier.
    8. 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.
    9. Fredriksson, Per G. & Neumayer, Eric & Damania, Richard & Gates, Scott, 2005. "Environmentalism, democracy, and pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 343-365, March.
    10. Wellisch Dietmar, 1995. "Locational Choices of Firms and Decentralized Environmental Policy with Various Instruments," Journal of Urban Economics, Elsevier, vol. 37(3), pages 290-310, May.
    11. Kunce, Mitch & Shogren, Jason F., 2005. "On interjurisdictional competition and environmental federalism," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 212-224, July.
    12. De Borger, Bruno & Van Dender, Kurt, 2003. "Transport tax reform, commuting, and endogenous values of time," Journal of Urban Economics, Elsevier, vol. 53(3), pages 510-530, May.
    13. Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
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    Cited by:

    1. Saveyn Bert & Van Regemorter Denise, 2007. "Environmental Policy in a Federal State - A Regional CGE Analysis of the NEC Directive in Belgium," Energy, Transport and Environment Working Papers Series ete0701, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.

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    More about this item

    Keywords

    Environmental Instrument Choice; Commuting; Interest Groups;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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