On Atmosphere Externality and Corrective Taxes
It has been argued that in the presence of an ’Atmosphere Externality’ and competitive behavior by households, a uniform commodity tax on the externality - generating good attains the first best. It is demonstrated, however, that if income redistribution is desirable then personalized taxes are required for a second-best optimum. Each of these taxes is the sum of a uniform (across households) tax and a component, positive or negative, which depends on the household’s income and demand elasticities. Second-best optimal indirect taxes and rules for investment in externality-reducing measures are also considered.
|Date of creation:||Feb 2002|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.ratio.huji.ac.il/
More information through EDIRC
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.:
- Peter A. Diamond, 1973. "Consumption Externalities and Imperfect Corrective Pricing," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 526-538, Autumn.
- Green, Jerry & Sheshinski, Eytan, 1976.
"Direct versus Indirect Remedies for Externalities,"
Journal of Political Economy,
University of Chicago Press, vol. 84(4), pages 797-808, August.
- Lau, Lawrence J & Sheshinski, Eytan & Stiglitz, Joseph E, 1978. "Efficiency in the Optimum Supply of Public Goods," Econometrica, Econometric Society, vol. 46(2), pages 269-84, March.
- Chipman, John S, 1970. "External Economies of Scale and Competitive Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 347-85, August.
- Aoki, Masahiko, 1971. "Marshallian External Economies and Optimal Tax-Subsidy Structure," Econometrica, Econometric Society, vol. 39(1), pages 35-53, January.
When requesting a correction, please mention this item's handle: RePEc:huj:dispap:dp328. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ilan Nehama)
If references are entirely missing, you can add them using this form.