Environmental Funds, Public Abatement and Welfare

Takumi Haibara

No 8, GSICS Working Paper Series from Graduate School of International Cooperation Studies, Kobe University

Abstract: We focus on environmental funds aimed at public abatement financed by tax revenue and obtain the result that governments should finance environmental funds with tariff revenue rather than pollution tax revenue in order to increase the funds and welfare when governments increase a pollution tax or reduce a tariff. These results are relevant for countries where an import competing sector protected by a tariff generates pollution emissions and the government seeks the revenues earmarked for the financing of environmental funds. We also show that the optimal pollution tax rate/tariff rate is higher/lower under tariff revenue-financed public abatement than it is under pollution tax revenue-financed public abatement.

Keywords: Environmental funds, pollution taxes; tariffs; public abatement; welfare (search for similar items in EconPapers)
JEL-codes: F18 H23 Q58 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2006-09
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Persistent link: https://EconPapers.repec.org/RePEc:kcs:wpaper:8

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