M. Shahe Emran and Joseph E. Stiglitz (2005) show that a revenue-neutral indirect tax reform, in which the value added tax (VAT) is increased to compensate for the revenue loss from tariff cuts, reduces welfare due to strong substitutability in consumption between formal and informal...

The present paper focuses on earmarking of taxation to pay for public pollution abatement within the context of trade and domestic tax reforms. We identify situations in which an increase in public abatement only increases welfare by more than that in private abatement only. We also show that...