IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Environmental and Distortionary Taxes: Comment

Listed author(s):
Registered author(s):

    This note argues that the conclusions and inferences in a recent literature on second-best environmental taxation are due to the use of a particular definition of "marginal social damage," one that is not based on the marginal rate of substitution between income and the environment for the social planner's problem. In particular, the definition used values an incremental unit of income in a way that does not reflect its Pareto efficient use. When the definition of marginal social damage from pollution is based on the social marginal rate of substitution between income and environmental quality, the optimal environmental tax is found to exceed marginal social damage in a second-best setting with revenue-raising taxes. Since, in the first-best case with no binding revenue requirement, the optimal environmental tax equals marginal social damage, it follows directly that the optimal environmental tax rises with increasing and binding revenue requirements over the range under consideration.

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Paper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2001-12.

    in new window

    Date of creation: Feb 2001
    Handle: RePEc:wil:wileco:2001-12
    Note: full text not available
    Contact details of provider: Postal:
    Williamstown, MA 01267

    Phone: 413 597 2476
    Fax: 413 597 4045
    Web page:

    More information through EDIRC

    Order Information: Email:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wil:wileco:2001-12. 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: (Stephen Sheppard)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.