A note on optimal taxation in the presence of externalities
In this paper, we reexamine the optimal tax problem with identical consumers in the presence of externalities by taking explicitly the interrelationship between externality and consumption into account. In setting out the optimal tax conditions in the presence of externalities, it is standard to follow Sandmo (1975) to employ the following assumptions: (i) separable externalities; and (ii) independent demands. We dispense with these restrictive assumptions and show the Sandmo’s “additivity property” where externalities only affect the tax formula for an externality generating good and do not affect other tax formulas.
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|Date of creation:||16 Feb 2005|
|Publication status:||Published in Discussion paper series (2005), 99: 1-7|
|Contact details of provider:|| Postal: 3-5-21 Midori, Otaru, 047-8501|
Web page: http://www.otaru-uc.ac.jp/dept/econ/
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- de Bovenberg, A Lans & Mooij, Ruud A, 1994.
"Environmental Levies and Distortionary Taxation,"
American Economic Review,
American Economic Association, vol. 84(4), pages 1085-1089, September.
- Bovenberg, A.L. & de Mooij, R.A., 1994. "Environmental levies and distortionary taxation," Other publications TiSEM 4b32deaa-ec2f-4de7-b59b-9, Tilburg University, School of Economics and Management.
- Sheshinski, Eytan, 2004. "On atmosphere externality and corrective taxes," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 727-734, March.
- Eytan Sheshinski, 2002. "On Atmosphere Externality and Corrective Taxes," Discussion Paper Series dp328, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Cremer, Helmuth & Gahvari, Firouz & Ladoux, Norbert, 1998. "Externalities and optimal taxation," Journal of Public Economics, Elsevier, vol. 70(3), pages 343-364, December. Full references (including those not matched with items on IDEAS)
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