Do Monopolies Justifiably Fear Environmental Tax Reforms?

Thorsten Bay¡nd¡r-Upmann

FinanzArchiv: Public Finance Analysis, 2001, vol. 57, issue 4, 459-484

Abstract: It is often argued that without tax-exemptions for the production sector environmental tax reforms substantially reduce profits and endanger employment. We challenge this view and investigate the consequences of both a small and alarge tax reform in the case of a monopoly. We show that these suspected effects are unlikely to emerge. Rather the contrary, for a wide range of ex ante tax systems, profits and employ-ment of non-polluting factors increase - and, in this sense, together with a positive environmental effect, a double, or evena triple dividend can often be attained. What we should, however, be concerned about is the effect of a green tax reform on the demand for environmentally harmful factors of production. When the double dividend fails, it frequently does so because the environmental dividend is lost.

JEL-codes: D42 D62 H21 H23 H32 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (2)

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