Atmospheric Externalities and Environmental Taxation

29 Pages Posted: 22 Sep 2010

See all articles by Agnar Sandmo

Agnar Sandmo

Norwegian School of Economics (NHH); Norwegian School of Economics (NHH) - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: September 1, 2010

Abstract

The paper reviews the theory of environmental taxation under first best and second best conditions. It argues that negative environmental externalities lead to reductions of the provision of public goods, while investment in abatement increases the supply of public goods. Together with optimal tax rules, the paper therefore also derives conditions for the optimal use of resources on abatement. After brief discussions of the dimensions of time and uncertainty, tax reform and the double dividend, and taxes versus quotas, the optimal tax model is applied to the problem of global warming with a discussion of the particular incentive problems that arise in designing and implementing global climate policy.

JEL Classification: D60, H41, H87

Suggested Citation

Sandmo, Agnar, Atmospheric Externalities and Environmental Taxation (September 1, 2010). NHH Dept. of Economics Discussion Paper No. 23/2010. Available at SSRN: https://ssrn.com/abstract=1680478 or http://dx.doi.org/10.2139/ssrn.1680478

Agnar Sandmo (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway
+47 55 95 92 76 (Phone)

Norwegian School of Economics (NHH) - Department of Economics

Helleveien 30
N-5035 Bergen
Norway

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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