Environmental policy choice: Pollution abatement subsidies (original) (raw)
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The Political Economy of Pollution Taxes in a Small Open Economy
Journal of Environmental Economics and Management, 1997
This paper develops a positive theory explaining pollution tax policy outcomes in a small open economy. The equilibrium tax rate depends on lobby group membership, the relative importance of lobbying activities, and the tax elasticity of pollution. The equilibrium properties are investigated. The model is extended to incorporate pollution abatement and a pollution abatement subsidy. We show that total pollution may be increasing in the pollution abatement subsidy rate. This effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium.
The Political Economy of Emission Tax Design in Environmental Policy
SSRN Electronic Journal, 2002
In actual environmental policy, the design of actual pollution emission taxes differs significantly with the optimal Pigovian tax. In particular, earmarking prevails and actual taxes are usually combined with regulation. Furthermore tax rates are generally too low to significantly influence polluters' behavior. The paper develops a political economy model to explain these design parameters: the tax rate, earmarking pattern and whether the tax is combined with a regulation. An incumbent government selects these parameters under the influence of a green and a polluters' lobby groups. An earmarked tax is introduced in equilibrium which rate is lower than the regulatory shadow price when the status quo regulation is imperfectly enforced and if the green lobby is sufficiently weak.
Environmental Policy and the Political Economy of Energy Subsidies
Environmental and Resource Economics Review, 2018
Industrial groups (representing the polluters) and environmental non-governmental organizations (representing the victims) respond differently to various environmental policy instruments. As the affected group's power is large either politically or economically, it is unlikely that a single instrument will be actually selected despite being effective or efficient because of the high political costs associated with it. In this paper, we focus on the political role that energy subsidies play in creating a compromise between energy consuming polluters and victims of pollution. The use of a Dolbear (1967)'s triangle Edgeworth box model makes it possible to examine how policy selection affects the income distribution and welfare levels of two groups. The effects of a single policy instrument of either direct regulation or tax are compared with those of a policy mix that includes energy subsidies. We found that the addition of energy subsidies would increase the chance of compromise between polluters and victims.
A Second-Best Analysis of Environmental Subsidies
International Tax and Public Finance - INT TAX PUBLIC FINANC, 1998
This paper examines the complications posed by pre-existing tax distortions in the economy, for the evaluation of a variety of subsidy policies that affect the environment. These complications include not only the efficiency cost of financing the subsidy by distortionary taxation, but also the interaction effects between the subsidized market and markets with pre-existing taxes. Studies that ignore both of these effects, or only incorporate the first type of effect, can be highly misleading.
Government Incentives when Pollution Permits are Durable Goods
Public Choice, 2003
This paper analyzes the incentive effects of pollution taxesversus pollution permits for a budget oriented Government.Pollution permits are analyzed as durable goods, and apollution tax is seen as being equivalent to leasing outpollution permits. First, a general model is developed, andthen four stylized types of Government are discussed (abenevolent dictator, a pure Leviathan, a green and a business-friendly Government). We show that all types of Governmentprefer a pollution tax system, but this regime is notnecessarily the best in social welfare terms. The intuition isthat a tax or leasing system makes it easier for theGovernment to credibly commit to the budget maximizing levelof pollution permits which is good for Government revenues,but not necessarily for social welfare.
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European Economic Review, 2014
European countries have increased their use of environmental tax instruments by designing new tax bases. But, many countries have to face the opposition of the public opinion, for fear of the distributive consequences of these environmental tax reforms. This paper sheds light on the distributive consequences of environmental tax policies when households are heterogeneous. The objective is to assess whether an environmental tax reform could be Pareto improving, when the revenue of the pollution tax is recycled by a change in the labor tax properties. We show that, whatever the degree of regressivity of the environmental tax alone, it is possible to design a recycling mechanism that renders the tax reform Pareto improving, by simultaneously decreasing the average rate of the wage tax and increasing its progressivity.
Comparative politics and environmental taxation
Journal of Environmental Economics and Management, 2004
In this paper, we take a step towards understanding the role of democratic institutions on the level of pollution taxation. The theory predicts that presidential-congressional regimes set lower pollution taxes than parliamentary regimes. This results from the checks and balances built into the former, and the higher degree of legislative cohesion in the latter. We test the prediction using the method of propensity score matching along with data on gasoline prices from 86 democratic countries. The empirical evidence is consonant with the theory: we find that ceteris paribus the average price of super gasoline
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2005
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