Abstract

http://ssrn.com/abstract=4949
 
 

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Optimal Environmental Taxation in the Presence of Other Taxes: General Equilibrium Analyses


Lawrence H. Goulder


Stanford University - Department of Economics; National Bureau of Economic Research (NBER); Resources for the Future

A. Lans Bovenberg


Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)


AMERICAN ECONOMIC REVIEW, Vol. 86, No. 4, September 1996

Abstract:     
This paper employs analytical and numerical general equilibrium models to examine the optimal setting of environmental taxes in the presence of pre-existing distortionary taxes. Both models indicate, contrary to what several analysts have suggested, that the optimal environmental tax rate in this setting is less than the rate implied by the "Pigovian principle," which would equate the tax to the marginal environmental damage from pollution. Numerical results show that previous studies may have seriously overstated the size of the optimal carbon tax by disregarding pre-existing taxes, and that the optimal carbon tax can be negative when revenues from the tax are recycled in a lump-sum fashion.

JEL Classification: D62, H21, H23

Accepted Paper Series





Not Available For Download

Date posted: April 21, 1998  

Suggested Citation

Goulder, Lawrence H. and Bovenberg, A. Lans, Optimal Environmental Taxation in the Presence of Other Taxes: General Equilibrium Analyses. AMERICAN ECONOMIC REVIEW, Vol. 86, No. 4, September 1996. Available at SSRN: http://ssrn.com/abstract=4949

Contact Information

Lawrence H. Goulder (Contact Author)
Stanford University - Department of Economics ( email )
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States
650-723-3706 (Phone)
650-725-5702 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Resources for the Future
1616 P Street, NW
Washington, DC 20036
United States
A. Lans Bovenberg
Tilburg University - Center for Economic Research (CentER) ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2912 (Phone)
+31 13 466 3066 (Fax)
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.CESifo.de
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