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Environmental policy, public goods, and the marginal cost of public funds

Listed author(s):
  • van der Ploeg, F.
  • Bovenberg, A.L.

    (Tilburg University, School of Economics and Management)

If private goods are perfect substitutes for public goods and environmental quality, greener preferences reduce employment, raise abatement, and improve environmental quality. If the elasticity of substitution between private goods and leisure exceeds one, the tax rate increases, thereby reducing private consumption. However, if labor supply bends backwards, private utility rises while the tax rate and public consumption fall. With imperfect substitution between private and public consumption, greener policies boost labor supply if the substitution elasticity between private and public consumption and the elasticity of the effectiveness of public abatement are small and the labor supply curve bends backwards. Copyright 1994 by Royal Economic Society.

(This abstract was borrowed from another version of this item.)

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Paper provided by Tilburg University, School of Economics and Management in its series Other publications TiSEM with number 84be6810-e643-436b-95b0-04fb29c894f8.

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Date of creation: 1994
Publication status: Published in Economic Journal (1994), v.104, nr.423, p.444-454
Handle: RePEc:tiu:tiutis:84be6810-e643-436b-95b0-04fb29c894f8
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