A Many-Person Corlett-Hague Tax Rule with Externalities

Oxford Economic Papers 52(3):595-605, 2001, DOI: 10.1093/oep/52.3.595

Posted: 8 Sep 2014

See all articles by Jukka Pirttila

Jukka Pirttila

United Nations - World Institute for Development Economics Research (UNU/WIDER); Tampere University of Technology

Date Written: January 1, 2001

Abstract

This study addresses environmental tax reforms in a many-person economy. Starting from a situation of uniform commodity taxation, a tax reform raising the tax on a good complementary to leisure or on a good that is environmentally harmful may be seen as welfare-improving as long as environmental externalities do not affect commodity demand. When environmental quality reduces commodity demand, a trade-off arises between the direct beneficial impact of the higher environmental tax and its indirect, harmful impact caused by reduced tax revenues. A second trade-off may also arise from a conflict between efficiency and distributional equity.

Suggested Citation

Pirttila, Jukka, A Many-Person Corlett-Hague Tax Rule with Externalities (January 1, 2001). Oxford Economic Papers 52(3):595-605, 2001, DOI: 10.1093/oep/52.3.595 . Available at SSRN: https://ssrn.com/abstract=2492548

Jukka Pirttila (Contact Author)

United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )

Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland

Tampere University of Technology ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

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