Environmental taxation: Pigouvian or Leviathan?

Isabelle Cadoret, Emma Galli () and Fabio Padovano
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Emma Galli: Sapienza University of Rome

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2021, vol. 48, issue 1, No 4, 37-51

Abstract: Abstract This paper empirically examines which type of fiscal levies are environmental taxes, by analyzing how governments actually use them. The theoretical literature is polarized between two alternative interpretations of environmental taxes: the Pigouvian and the Leviathan hypotheses, each leading to alternative testable hypotheses. We test them on a sample where the analysts’ discretionary evaluations are minimal, the EU-28 countries that committed themselves to correcting a negative environmental externality, the greenhouse gas emissions, by 2020. The estimates lend support to the strict Pigouvian hypothesis, while the Leviathan hypothesis appears less consistent with the data.

Keywords: Environmental taxes; Pigouvian taxation; Leviathan government; GHG reduction; Arellano–Bond GMM (search for similar items in EconPapers)
JEL-codes: D72 D73 D78 H54 H87 Q28 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s40812-020-00149-8

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