A Note on Weak Double Dividends

Mustafa H. Babiker, Gilbert Metcalf () and John Reilly

No 307, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: A weak double-dividend is the proposition that the welfare improvement from a tax reform, where environmental taxes are used to lower distorting taxes, must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion. A general consensus has emerged that the weak double-dividend is an uncontroversial idea. We show in this note that a weak double-dividend need not hold in a world with multiple distortions.

Keywords: environmental tax policy; second-best taxation; general equilibrium analysis (search for similar items in EconPapers)
JEL-codes: H2 Q2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-res
Date: Written 2003

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Journal Article: A Note on Weak Double Dividends (2004)
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