Pigouvian Taxes in General Equilibrium with a Fixed Tax Redistribution Rule.
This paper establishes existence of a first-best emission tax in a general equilibrium model with pollution, when the redistribution rule of the tax income is chosen fixed and independently of the Pigouvian tax rate. It is known that under standard convexity assumptions each Pareto efficient allocation can be implemented by simultaneously choosing a Pigouvian tax rate and an appropriate lump sum redistribution of income. In real politics, however, tax redistribution schemes are often restricted to a small feasible set. Nonetheless we show that for any given lump sum redistribution rule, being continuous in overall tax income, an emission tax rate exists that leads to a Pareto efficient equilibrium. Copyright 2000 by Blackwell Publishing Inc.
Year of publication: |
2000
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Authors: | Lange, Andreas ; Requate, Till |
Published in: |
Journal of Public Economic Theory. - Association for Public Economic Theory - APET, ISSN 1097-3923. - Vol. 2.2000, 1, p. 25-42
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Publisher: |
Association for Public Economic Theory - APET |
Saved in:
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