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Coasean bargaining in the presence of Pigouvian taxation

Ian MacKenzie () and Markus Ohndorf ()

Journal of Environmental Economics and Management, 2016, vol. 75, issue C, 1-11

Abstract: Coasean arguments against the Pigouvian perspective are well established. A central tenet in this criticism argues that a Pigouvian tax may be a source of inefficiency: if parties were to bargain in the presence of a Pigouvian tax, (allocative) inefficiencies would occur—the so-called Buchanan–Stubblebine–Turvey Theorem. By analyzing a Coasean environment where the appropriation of property rights is costly, we show Coasean bargaining in the presence of a pre-existing (Pigouvian) tax may be superior. This has implications for policy where dual regulatory environments exist, such as regulation at the state and federal level, as well as environmental liability and litigation.

Keywords: Coasean bargaining; Pigouvian taxation (search for similar items in EconPapers)
JEL-codes: D62 D72 H23 Q50 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:75:y:2016:i:c:p:1-11

DOI: 10.1016/j.jeem.2015.09.003

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Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

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