Environmental taxes and strategic delegation |
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Authors: | Juan Carlos Bárcena-Ruiz María Begoña Garzón |
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Institution: | (1) Departamento de Fundamentos del Análisis Económico I, Universidad del País Vasco, Avenida Lehendakari Aguirre, 83, 48015 Bilbao, Spain (e-mail: {jepbaru,jepgasabj}@bs.ehu.es) , ES |
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Abstract: | This paper analyzes a managerial delegation model in which the government chooses an environmental tax to control environmental
damage. By giving the managers of firms an incentive scheme based on a linear combination of profit and sales revenue, we
show that firm owners have to pay a higher environmental tax and both environmental damage and social welfare increase compared
to the profit-maximization case.
Financial support from UPV (Subvención a grupos, 2001), UPV (HB-8238/2000) and MEC (BEC 2000-0301) is gratefully acknowledged.
We would like to thank A. Saracho and two referees for helpful comments. The usual disclaimer applies. |
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Keywords: | JEL Classification: L13 Q28 |
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