Marginal Cost of Indirect Taxation in the presence of a Demerit Externality with an Application to Carbon Dioxide Emissions in Belgium

Bart Defloor

Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration

Abstract: This paper aims to calculate marginal costs of funds (MCF) in the presence of an externality with demerit properties by using a utility scaling approach. It is an extension of a model put forward by Schroyen (2010). In the empirical section the MCF of indirect taxes in Belgium are calculated taking into account the existence of carbon dioxide emissions as demerit externality. The results reveal that scaling has a significant impact on switches in the ranking of the MCF.

JEL-codes: D12 H21 H23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-06
New Economics Papers: this item is included in nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:10/656

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