The Welfare Effects of Environmental Taxation |
| |
Authors: | William K Jaeger |
| |
Institution: | 1.Department of Agricultural and Resource Economics,Oregon State University,Corvallis,USA |
| |
Abstract: | Recent literature has investigated whether the welfare gains from environmental taxation are larger or smaller in a second-best
setting than in a first-best setting. This question has mainly been addressed indirectly, by asking whether the second-best
optimal environmental tax is higher or lower than the first-best Pigouvian rate. Even this indirect question has itself been
approached indirectly, comparing the second-best optimal environmental tax to a proxy for its first-best value, marginal social
damage (MSD). On closer examination, however, MSD becomes ambiguously defined and variable in a second-best setting making
it an unreliable proxy for the Pigouvian rate. Given these observations, the current analysis reevaluates these welfare questions
and finds that when compared directly to its first-best value, the second-best optimal environmental tax generally rises with
increased revenue requirements. Even in cases where the second-best environmental tax is lower than its first-best value,
the welfare gains may be greater than in a first-best setting. These results suggest that the marginal fiscal benefit (revenue
recycling effect) exceeds the marginal fiscal cost (tax base effect) over a range of environmental tax rates that, for benchmark
models, extends above the first-best Pigouvian rate. These findings reinforce the intuition that environmental policy complements
rather than competes with the provision of other public goods. |
| |
Keywords: | |
本文献已被 SpringerLink 等数据库收录! |
|