On the pigouvian tax rule in an open economy: the case of abatement technology trade

Idrissa Sibailly ()
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Idrissa Sibailly: Ecole Polytechnique, Department of Economics and CREST-LEI

Economics Bulletin, 2015, vol. 35, issue 4, 2733-2741

Abstract: This note investigates the impact of international trade in pollution abatement technology on optimal pollution taxation. The abatement technology is licensed by an international eco-industry to domestic polluters at a fee that extracts the abatement rent (i.e. the abatement technology is subject to nonlinear pricing). The analysis highlights the trade-off between production efficiency and rent-shifting, faced by abatement technology importing countries: The emissions tax maximizing domestic welfare is below the marginal damage of emissions if some of the abatement rent is captured by foreign technology suppliers, and it decreases as the share of imported technologies increases.

Keywords: Pigouvian Taxes; Eco-Industry; Technology Licensing; End-of-pipe; International Trade; Environmental Goods and Services. (search for similar items in EconPapers)
JEL-codes: H2 Q5 (search for similar items in EconPapers)
Date: 2015-12-13
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