International Environmental Policy Reforms, Tax Distortions, and the Labor Market

Thomas Aronsson, Thomas Jonsson and Tomas Sjögren
Authors registered in the RePEc Author Service: Thomas Bergman ()

FinanzArchiv: Public Finance Analysis, 2006, vol. 62, issue 2, 199-217

Abstract: This paper concerns the welfare consequences of environmental policy cooperation in a two-country economy. We assume that the countries finance their public expenditures by using distortionary taxes, and that they differ with respect to competition in the labor market. The purpose is to characterize the welfare effect of a policy reform, where the countries agree to slightly increase their expenditures on abatement. We show how the welfare effect of the policy reform depends on changes in the environmental damage, employment, and work hours. We also relate the welfare effect to the strategic interaction among the countries in the prereform equilibrium.

Keywords: policy cooperation; distortionary taxes; labor market; Nash game; Stackelberg game (search for similar items in EconPapers)
JEL-codes: H41 J51 J60 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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DOI: 10.1628/001522106X120668

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