We consider a special case of Schmutzler's and Goulder''s (1997) analysis of output taxes vs emission taxes as environmental policy instruments. We identify new necessary conditions for the existence of an optimum. We also show that, in this case, it is always optimal to have a mixed tax with...

We consider a special case of Schmutzler's and Goulder''s (1997) analysis of output taxes vs emission taxes as environmental policy instruments. We identify new necessary conditions for the existence of an optimum. We also show that, in this case, it is always optimal to have a mixed tax with...

The 'polluter pays principle' (PPP) is one of the four principles that govern the European Union's environmental policy. Although PPP justifies Pigovian taxation as a legitimate policy means to internalise externalities, there is a potential contradiction between PPP and Pigovian taxation...