Environmental Quality,Medical Care Demand and Environmental Tax Interactions |
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Authors: | Çağatay Koç |
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Institution: | (1) Department of Economics, The University of Texas at Arlington, Box 19479, Arlington, TX 76019, USA |
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Abstract: | Assuming that improvements in environmental quality lead to lower demand for medical care, it has been shown that general-equilibrium
interactions with the tax-distorted labor market reduce the benefits from such improvements, and thus lower the second-best
optimal environmental tax. This paper provides some insights on how the link between environmental quality, individual’s health
capital, and the demand for medical care affects the analysis of pollution taxes. The paper develops structural conditions
under which improvements in environmental quality decrease/increase the demand for medical care and discusses their implications
for environmental tax interactions.
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Keywords: | second-best environmental taxes medical care demand elasticity tax interaction |
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