Atmospheric Externalities and Environmental Taxation

Agnar Sandmo

No 23/2010, Discussion Paper Series in Economics from Norwegian School of Economics, Department of Economics

Abstract: The paper reviews the theory of environmental taxation under first best and second best conditions. It argues that negative environmental externalities lead to reductions of the provision of public goods, while investment in abatement increases the supply of public goods. Together with optimal tax rules, the paper therefore also derives conditions for the optimal use of resources on abatement. After brief discussions of the dimensions of time and uncertainty, tax reform and the double dividend, and taxes versus quotas, the optimal tax model is applied to the problem of global warming with a discussion of the particular incentive problems that arise in designing and implementing global climate policy.

Keywords: Environmental taxation; Public goods (search for similar items in EconPapers)
JEL-codes: D60 H41 H87 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2010-09-10
New Economics Papers: this item is included in nep-acc, nep-ene, nep-env and nep-pbe
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Journal Article: Atmospheric externalities and environmental taxation (2011)
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