Optimal taxation in the presence of a congested public good and an application to transport policy

Knud Munk

No 2011057, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper we demonstrate that even if policies prior to reform have been rational, it is possible, in fact in certain policy areas likely, that a green tax reform, contrary to the perceived wisdom among economists, will be associated with a double-dividend, i.e. with both environmental and fiscal benefits. We first establish this theoretically by avoiding imposing potentially unrealistic separability assumptions, and by recognising that taxation involves administrative costs. To illustrate our theoretical results, we use graphical tools well-known from fishery economics to assess the effects of the introduction of a tax on road transport.

Keywords: optimal taxation; congested public goods; externalities; administrative costs; green tax reform; double-dividend; transport policy; cost-benefit criteria (search for similar items in EconPapers)
JEL-codes: H2 H29 (search for similar items in EconPapers)
Date: 2011-12-07
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2011057

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