Work

Optimal Taxation of Externalities Interacting Through Markets: A Theoretical General Equilibrium Analysis

Year: 2010

Type: preprint

Abstract: This study develops a theoretical general equilibrium model to examine optimal externality tax policy in the presence of externalities linked to one another through markets rather than technical production relationships. Analytical results reveal that the second-best externality tax rate may be greater or less than the first-best rate, depending largely on the elasticity of substitution between the two externality-generating products. These results are explored empirically for the case of greenhouse gas and nitrogen emissions associated with biofuels and petroleum.

Source: RePEc: Research Papers in Economics

Authors: Xiaolin Ren, Don Fullerton, John B. Braden

Institutions: NSF National Center for Atmospheric Research, NSF NCAR Climate and Global Dynamics Laboratory, National Bureau of Economic Research, Ifo Institute for Economic Research, University of Illinois Urbana-Champaign

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funders: National Science Foundation, U.S. Department of Agriculture, National Institute of Food and Agriculture, Division of Civil, Mechanical and Manufacturing Innovation

Award: PREMISE II: Comparative Life Cycle Impacts of Bio- and Petro-based Lubricants

OpenAlex ID: W3123773849