Welfare implications of Pigovian taxation of a durable goods monopolist

Rajeev Goel and Edward Wei-Te Hsieh

Applied Economics Letters, 1999, vol. 6, issue 10, 625-627

Abstract: This paper examines the effectiveness of Pigovian taxation in checking the behaviour of a durable goods monopolist who generates some externality in the production process. The durable good lasts two periods. It is found that while the effect of an increase in the tax is to lower the first period output, the second period output decreases only under certain conditions. The overall welfare effect of a Pigovian tax can either be positive or negative depending on the relative magnitudes of the price-cost margins, the extent of the negative externality, the extent of longevity (durability) of the first period output and the underproduction relative to social optima. Public policy implications are discussed.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.informaworld.com/openurl?genre=article& ... 40C6AD35DC6213A474B5 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:6:y:1999:i:10:p:625-627

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/135048599352376

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().