SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Parry, Ian W.H.; Small, Kenneth A..

This paper develops an analytical framework for assessing the second-best optimal level of gasoline taxation taking into account unpriced pollution, congestion, and accident externalities, and interactions with the broader fiscal system. We provide calculations of the optimal taxes for the US and the UK under a wide variety of parameter scenarios, with the gasoline tax substituting for a distorting tax on labor income. Under our central parameter values, the second-best optimal gasoline tax is $1.01/gal for the US and $1.34/gal for the UK. These values are moderately sensitive to alternative parameter assumptions. The congestion externality is the largest component in both nations, and the higher optimal tax for the UK is due mainly to a higher assumed...

The Welfare Effects of Environmental Taxation

Palavras-chave: Gasoline tax; Pollution; Congestion; Accidents; Fiscal interactions; Public Economics; H21; H23; R48.

Ano: 2004

URL: http://purl.umn.edu/10461

Jaeger, William K..

Recent literature has investigated whether the welfare gains from environmental taxation are larger or smaller in a second-best setting than in a first-best setting. This question has mainly been addressed indirectly, by asking whether the second-best optimal environmental tax is higher or lower than the first-best Pigouvian rate. Even this indirect question, though, has itself been approached indirectly, comparing the second-best optimal environmental tax to a proxy for its first-best value, an expression for marginal social damage (MSD). On closer examination, however, MSD becomes ambiguously defined and variable in a second-best setting, making it an unreliable proxy for the first-best Pigouvian rate. With these concerns in mind, the current analysis...

Fiscal Interactions and the Case for Carbon Taxes over Grandfathered Carbon Permits

Palavras-chave: Optimal Environmental Tax; Second-best; Double Dividend; Tax Interaction Effect; Revenue Recycling; Tax Base Effect; Pigouvian Rate; Excess Burden; Environmental Economics and Policy; H21; Q5.

Ano: 2009

URL: http://purl.umn.edu/50358

This paper provides simple formulas for adjusting the costs of carbon taxes and tradable carbon permits to account for interactions with preexisting tax distortions in the labor market. Both policies reduce labor supply as they increase product prices and reduce real household wages; the resulting efficiency losses in the labor market can be substantial relative to partial equilibrium abatement costs. However, much of this added cost can be offset-and perhaps more than offset when additional distortions from the tax system are considered-if revenues from carbon taxes or auctioned permits are used to reduce distortionary taxes. Consequently, there can be a strong case on efficiency grounds for using carbon taxes or auctioned permits over grandfathered...

How Should Metropolitan Washington, DC, Finance Its Transportation Deficit?

Palavras-chave: Carbon taxes; Carbon permits; Fiscal interactions; Revenue recycling; Environmental Economics and Policy; Q28; H21; H23.

Ano: 2003

URL: http://purl.umn.edu/10509

It is widely perceived that projected public spending on transportation infrastructure in the metropolitan Washington, DC, area for the next 20 years will not be enough to halt, let alone reverse, the trend of increasing traffic congestion. Consequently, there has been much debate about how additional sources of local revenues might be raised to finance more transportation spending. This paper develops and implements an analytical framework for estimating the efficiency costs of raising $500 million per annum in local revenue from five possible sources. These sources are increasing labor taxes, property taxes, gasoline taxes, transit fares, and implementing congestion taxes. Our model incorporates congestion and pollution externalities, and it allows for...

Waste, Recycling, and "Design for Environment": Roles for Markets and Policy Instruments

Palavras-chave: Transportation; Taxes; Washington DC; Welfare cost; Public Economics; R48; H21; H23.

Ano: 2001

URL: http://purl.umn.edu/10552

Calcott, Paul; Walls, Margaret.

Several studies that have solved for optimal solid waste policy instruments have suggested that transaction costs may often prevent the working of recycling markets. In this paper, we explicitly incorporate such costs into a general equilibrium model of production, consumption, recycling, and disposal. Specifically, we assume that consumers have access to both recycling without payment and recycling with payment but that the latter option comes with transaction costs. Producers choose material and nonmaterial inputs to produce a consumer product, and they also choose design attributes of that product-its weight and degree of recyclability. We find that the policy instruments that yield a social optimum in this setting need to vary with the degree of...

Taxes Versus Quotas for a Stock Pollutant

Palavras-chave: Dfe; Deposit-refund; Disposal fee; Constrained optimum; Environmental Economics and Policy; H21; Q28.

Ano: 2002

URL: http://purl.umn.edu/10900

Hoel, Michael; Karp, Larry S..

We compare the effects of taxes and quotas for an environmental problem in which the regulator and polluter have asymmetric information about abatement costs, and the environmental damage depends on the stock of pollution. We thus extend, to a dynamic framework, previous studies in which environmental damages depend on the flow of pollution. As with the static analysis, an increase in the slope of the marginal abatement cost curve, or a decrease in the slope of the marginal damage curve, favors taxes. In addition, in the dynamic model, an increase in the discount rate or the stock decay rate favor the use of taxes. Taxes certainly dominate quotas if the length of a period during which decisions are constant is sufficiently small. An empirical illustration...

How Large Are the Welfare Costs of Tax Competition?

Palavras-chave: Pollution control; Asymmetric information; Taxes and quotas; Stochastic control; Environmental Economics and Policy; H21; Q28.

Ano: 2001

URL: http://purl.umn.edu/25010

Previous literature has shown that competition among regional governments may lead to inefficiently low levels of capital taxation, because governments do not take account of the external benefits of capital flight to other regions. However, the fiscal distortion is smaller the more elastic the supply of capital (for the region bloc), if governments are not perfectly competitive, or they behave in part as a revenue-maximizing Leviathan. There has been very little empirical work on the magnitude of the welfare effects of fiscal competition. This paper presents extensive calculations of the welfare effects using a model that incorporates the possibility of Leviathan behavior, strategic behavior by governments, monopsony power in factor markets, and a wide...

Taxes Versus Quantities for a Stock Pollutant with Endogenous Abatement Costs and Asymmetric Information

Palavras-chave: Fiscal competition; Tax harmonization; Welfare costs; Leviathan; Strategic behavior; Public Economics; H73; H21; H23.

Ano: 2001

URL: http://purl.umn.edu/10848

Karp, Larry S.; Zhang, Jiangfeng.

Non-strategic firms with rational expectations make investment and emissions decisions. The investment rule depends on firms’ beliefs about future emissions policies. We compare emissions taxes and quotas when the (strategic) regulator and (nonstrategic) firms have asymmetric information about abatement costs, and all agents use Markov Perfect decision rules. Emissions taxes create a secondary distortion at the investment stage, unless a particular condition holds; emissions quotas do not create a secondary distortion. We solve a linear-quadratic model calibrated to represent the problem of controlling greenhouse gasses. The endogeneity of abatement capital favors taxes, and it increases abatement.

Tipo: Thesis or Dissertation

Palavras-chave: Pollution control; Investment; Asymmetric information; Rational expectations; Choice of instruments; Resource /Energy Economics and Policy; C61; D8; H21; Q28.

Ano: 2008

URL: http://purl.umn.edu/42877

KNOWLEDGE SPILLOVER, LEARNING INCENTIVES AND ECONOMIC GROWTH

Tsur, Yacov; Zemel, Amos.

Knowledge spillover implies that the social value of knowledge is higher than its private value and leads to insufficient private investment in human capital. This paper examines implications for economic growth and offers a remedy. An incentive mechanism that implements the socially optimal outcome is offered based on learning subsidy and flat income or consumption taxes (each levied at a different phase of the growth process). The scheme is self-financed in that the tax proceeds cover exactly the subsidy payments at each point of time.

CONSUMER AND IMPORT TAXES IN THE WORLD WINE MARKET: AUSTRALIA IN INTERNATIONAL PERSPECTIVE

Palavras-chave: Endogenous growth; Human capital; Knowledge spillover; Learning incentives; Linear taxes; International Development; C61; H21; O33; O38; O41.

Ano: 2004

URL: http://purl.umn.edu/14991

Berger, Nicholas; Anderson, Kym.

Virtually all countries tax the consumption of wine (and other alcoholic beverages). However, the rates of taxation, and the tax instruments used, vary enormously between countries. This paper details for all OECD and some other countries the consumer tax rates as of 1996, showing specific or ad valorem excise or wholesale sales taxes, import tariffs, export subsidies and value-added or goods-and-services taxes. It also aggregates them into an ad valorem consumer tax equivalent (CTE) at various wine price levels (since many are specific taxes and so their CTE varies with the price). T he consumer tax equivalent tends to be lower the greater a country's per capita production of wine, especially for premium wine. Australia and New Zealand are shown to have...

Tipo: Presentation

Palavras-chave: Consumer wine taxation; GST; Excise taxes; Consumer/Household Economics; H21; H22; H23; F13.

Ano: 1999

URL: http://purl.umn.edu/123770

Green industrial policy: trade and theory

Karp, Larry S.; Stevenson, Megan.

This paper studies the reality and the potential for green industrial policy. We provide a summary of the green industrial policies, broadly understood, for five countries. We then consider the relation between green industrial policies and trade disputes, emphasizing the Brazil-US dispute involving ethanol and the broader US-China dispute. The theory of public policy provides many lessons for green industrial policy. We select four of these lessons, involving the Green Paradox, the choice of quantities versus prices with endogenous investment, the coordination issues arising from emissions control, and the ability of green industrial policies to promote cooperation in reducing a global public bad like carbon emissions.

Tipo: Working Paper

Palavras-chave: Green industrial policy; Trade conflicts; Green paradox; Asymmetric information; Coordination games; Participation games; Institutional and Behavioral Economics; Research and Development/Tech Change/Emerging Technologies; F13; F18; H21; H23.

Ano: 2012

URL: http://purl.umn.edu/123637

Information Asymmetry and the Problem of Transfers in Trade Negotiations and International Agencies

Hamada, Koichi; Sunder, Shyam.

This paper studies the role of transfers among groups within a country as well as among countries in a two level game of international trade negotiations. We show that in order to realize the intended transfer in the presence of asymmetric information on the states of recipients (and donors), a transfer process uses up additional resources. The difficulty of making transfers renders it less likely that a nation would find it individually rational to participate as a member of an international institution. Costly transfers render the internal and international adjustment difficult, and serve as a barrier to trade liberalization. Costly international transfers harden the resistance against trade liberalization in the (potentially) recipient country and...

Renewable Energy Subsidies: Second-Best Policy or Fatal Aberration for Mitigation?

Palavras-chave: International trade; Tariff negotiation; Asymmetric information; Transfer; WTO; Common agency; Two-level game; International Relations/Trade; O82; F13; H21; H71; H77.

Ano: 2005

URL: http://purl.umn.edu/28490

Kalkuhl, Matthias; Edenhofer, Ottmar; Lessmann, Kai.

This paper evaluates the consequences of renewable energy policies on welfare, resource rents and energy costs in a world where carbon pricing is imperfect and the regulator seeks to limit emissions to a (cumulative) target. We use a global general equilibrium model with an intertemporal fossil resource sector. We calculate the optimal second-best renewable energy subsidy and compare the resulting welfare level with an efficient first-best carbon pricing policy. If carbon pricing is permanently missing, mitigation costs increase by a multiple (compared to the optimal carbon pricing policy) for a wide range of parameters describing extraction costs, renewable energy costs, substitution possibilities and normative attitudes. Furthermore, we show that small...

Double Dividend with Trade Distortions: Analytical Results and Evidence from Chile

Palavras-chave: Feed-in-Tariff; Carbon Trust; Carbon Pricing; Supply-Side Dynamics; Green Paradox; Climate Policy; Resource /Energy Economics and Policy; Q4; Q52; Q54; Q58; D58; H21.

Ano: 2011

URL: http://purl.umn.edu/108261

Beghin, John C.; Dessus, Sebastien.

The double-dividend debate evolves around the possibility (or not) of substituting environmental taxes for more distortionary taxes to reduce both pollution degradation and/or damages (the first dividend) and the excess burden of existing taxes (the second dividend), without eroding tax revenues. This paper contributes to the double dividend debate with a formal analysis and some numerical evidence emphasizing trade and environmental distortions. The substitution of environmental taxes for trade distortions has been neglected in the double-dividend debate, which has centered on labor market distortions. Conditions for the existence of a double dividend are derived for different characterizations of preferences and policy menus. We empirically explore the...

Rebating Environmental Policy Revenues: Output-Based Allocations and Tradable Performance Standards

Palavras-chave: Double dividend; Trade and environment; Piecemeal reform; Policy coordination; Chile; International Relations/Trade; F13; Q28; H21.

Ano: 1999

URL: http://purl.umn.edu/18569

Fischer, Carolyn.

Political pressure often exists to earmark environmental tax revenues or permit rents to the industry affected by the regulation. This paper analyzes schemes that rebate revenues based on output shares: tradable performance standards, an emissions tax with market-share rebates, and tradable permits with output-based allocation. All three policies effectively combine a tax on emissions with a subsidy to output. The result is a shifting of emissions control efforts toward greater emissions rate reduction and less output contraction, with higher marginal costs of control and lower output prices compared to the social optimum, given any targeted level of abatement. These welfare costs depend on the degree of output substitutability and are likely to be much...

Uncertainty and the Double Dividend Hypothesis

Palavras-chave: Emission tax; Permit allocation; Earmarking; Tradable performance standards; Environmental Economics and Policy; H21; H23; Q2.

Ano: 2001

URL: http://purl.umn.edu/10709

Sartzetakis, Eftichios S.; Tsigaris, Panagiotis D..

This paper examines the double dividend hypothesis in the presence of labour income uncertainty. Empirical evidence shows that uncertainty over labour income is particularly significant in developing, while not negligible in developed countries. Under uncertainty, and assuming incomplete capital markets, the tax system plays a role in providing social insurance and a green tax reform influences its effectiveness. We show that the increase in environmental tax reduces consumption risk while the balanced budget decrease in labour income tax increases income risk. We find that the total welfare effect of a green tax reform differs substantially from the case of certainty. The critical parameters determining the existence of a second dividend are the lump sum...

Is Pay-As-You-Drive Insurance a Better Way to Reduce Gasoline than Gasoline Taxes?

Palavras-chave: Double Dividend Hypothesis; Environmental Taxation; Labor Income Taxation; Uncertainty; Tax Incidence Analysis; Labor and Human Capital; H21; H23; D62.

Ano: 2007

URL: http://purl.umn.edu/7445

Gasoline taxes are widely perceived as the most efficient instrument for reducing gasoline consumption because they exploit all behavioral responses for reducing fuel use, including reduced driving and improved fuel economy. At present, however, higher fuel taxes are viewed as a political nonstarter. Pay-as-you-drive (PAYD) auto insurance, which involves replacing existing lump-sum premiums with premiums that vary in proportion to miles driven, should be more practical, since they do not raise driving costs for the average motorist. We show that when impacts on a broad range of motor vehicle externalities are considered, PAYD also induces significantly higher welfare gains than comparable gasoline tax increases, for fuel reductions below 9%. The reason is...

Estimating the Welfare Effect of Congestion Taxes: The Critical Importance of Other Distortions Within the Transport System

Palavras-chave: Gasoline tax; Pay-as-you-drive insurance; Mileage tax; Welfare effects; Motor vehicle externality; Risk and Uncertainty; H21; H23; R48.

Ano: 2005

URL: http://purl.umn.edu/10465

Parry, Ian W.H.; Bento, Antonio M..

This paper uses analytical and numerical models to illustrate how the presence of other distortions within the transport system changes the overall welfare effect of a congestion tax. These other distortions include a transit fare subsidy, congestion on competing (unpriced) routes, accident externalities, gasoline taxes, and pollution externalities. Each of these pre-existing distortions can substantially alter the welfare effect of a congestion tax that would be predicted by a first-best analysis. If congestion taxes encourage travel on other congested routes, they can produce sizeable indirect welfare losses. In addition, induced reductions in the demand for gasoline can lead to substantial welfare losses when, as appears to be the case for European...

Policies to Encourage Recycling and "Design for Environment": What to Do When Markets Are Missing

Palavras-chave: Congestion tax; Welfare effect; Transit subsidy; Gasoline tax; Accidents; Pollution; Public Economics; R41; H21; H23.

Ano: 2000

URL: http://purl.umn.edu/10678

Calcott, Paul; Walls, Margaret.

Several studies have shown the efficiency of both a Pigovian tax on waste disposal and a deposit-refund instrument, that is a combined output tax and recycling subsidy. The efficiency of these instruments, however, critically depends on households being paid for recycling. In reality, although most households have access to curbside recycling services, they are not paid for the items they set out at the curb. All items placed in a recycling bin are thus of equal value to a household, and there is no incentive for producers to make their products any more recyclable than what is necessary to be eligible for the bin. This paper characterizes the constrained (second-best) optimum that exists with the missing recycling market and solves for a modified...

Revenue Recycling and the Welfare Effects of Road Pricing

Palavras-chave: Solid waste; Regulatory policy; Regulatory design; Environmental Economics and Policy; H21; Q28.

Ano: 2000

URL: http://purl.umn.edu/10567

Parry, Ian W.H.; Bento, Antonio M..

This paper explores the interactions between taxes on work-related traffic congestion and pre-existing distortionary taxes in the labor market. A congestion tax raises the overall costs of commuting to work and discourages labor force participation at the margin, when revenues are returned in lump-sum transfers. We find that the resulting efficiency loss in the labor market can be larger than the Pigouvian efficiency gains from internalizing the congestion externality. In contrast, if congestion tax revenues are used to reduce labor taxes the net impact on labor supply is positive, and the efficiency gain in the labor market can raise the overall welfare gains of the congestion tax by as much as 100 percent. Recycling congestion tax revenues in public...