Environmental Policy and Optimal Taxation in a Decentralized Economic Federation - 10.1628/001522106X153464 - Mohr Siebeck
Economics

Thomas Aronsson, Thomas Jonsson, Tomas Sjögren

Environmental Policy and Optimal Taxation in a Decentralized Economic Federation

Section: Articles
FinanzArchiv (FA)

Volume 62 () / Issue 3, pp. 437-454 (18)

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This paper deals with environmental policy in an economic federation, where each national (lower level) government faces a mixed tax problem. We assume that the federal government sets emission targets, which are implemented at the national level. We also assume that the economic federation is decentralized, meaning that the national governments are first movers vis-à-vis the federal government. Our results show that each country uses its policy instruments, at least in part, to influence the emission target. This has several implications: first, the commodity taxes do not satisfy the so-called additivity property often emphasized in earlier literature, and, second, it provides an argument for using distortionary labor income taxation.
Authors/Editors

Thomas Aronsson No current data available.

Thomas Jonsson No current data available.

Tomas Sjögren No current data available.