Product Quality and Environmental Taxation

Gareth Myles () and A. Uyduranoglu

Discussion Papers from University of Exeter, Department of Economics

Abstract: In developed countries, car use is one of the most significant contributors to air pollution. It is also a notable fact that larger, heavier cars consume more fuel and hence contribute more to pollution. This observation has lead to policy proposals to structure taxation to encourage the use of smaller, lighter cars. A model of vertical product differentiation is used to explain why different types of car are chosen. The correct policy response to the externality problem is then investigated using this model. It is shown that there are reasons why the standard policy response may be flawed and that it may even be optimal to subsidize large cars at the expense of small. A comparison of policies reveals that the relative merits of differentiated annual taxes and differentiated fuel taxes are dependent on the degree of income inequality.

Keywords: ENVIRONMENT; TAXES; POLLUTION (search for similar items in EconPapers)
JEL-codes: H2 R4 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2000
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:exe:wpaper:0010

Access Statistics for this paper

More papers in Discussion Papers from University of Exeter, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Sebastian Kripfganz ().