Emission Taxes when Pollution Depends on Location

18 Pages Posted: 22 Jan 2009 Last revised: 4 Oct 2014

See all articles by Walid Marrouch

Walid Marrouch

Lebanese American University; CIRANO

Bernard Sinclair-Desgagne

SKEMA Business School - Sophia Antipolis Campus

Date Written: November 3, 2009

Abstract

It is well-known that an efficient pollution taxation scheme should charge each source according to its specific marginal contribution to social damages. Despite significant advances in environmental assessment and data analysis, this requirement would impose technical, informational and administrative expenses that most regulators - notably in developing countries - seem unable to afford. This paper shows it can actually be less demanding than it seems. If polluters are price-takers, for instance, in a context where the affected population concentrates at a given location, then the optimal emission tax will disregard a source's location. Otherwise, the adjustment of the optimal tax to location will depend on the extent of a polluter's market power.

Keywords: Pigouvian tax, spatial information, market structure

JEL Classification: D62, H23, Q58, R38

Suggested Citation

Marrouch, Walid and Sinclair-Desgagne, Bernard, Emission Taxes when Pollution Depends on Location (November 3, 2009). CIRANO - Scientific Publications 2008s-04. Available at SSRN: https://ssrn.com/abstract=1330433 or http://dx.doi.org/10.2139/ssrn.1330433

Walid Marrouch

Lebanese American University ( email )

P.O. Box 13 - 5053
Chouran-Beirut
Beirut, 1102 2801
Lebanon

CIRANO ( email )

1130 Rue Sherbrooke #1400
Montreal, Quebec H3A 2M8
Canada

Bernard Sinclair-Desgagne (Contact Author)

SKEMA Business School - Sophia Antipolis Campus ( email )

60 rue Dostoïevski
Sophia Antipolis, 06902
France

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