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On the pigouvian tax rule in an open economy: the case of abatement technology trade

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  • Idrissa G.-O. Sibailly

    (Ecole Polytechnique, Department of Economics and CREST-LEI)

Abstract

This note investigates the impact of international trade in pollution abatement technology on optimal pollution taxation. The abatement technology is licensed by an international eco-industry to domestic polluters at a fee that extracts the abatement rent (i.e. the abatement technology is subject to nonlinear pricing). The analysis highlights the trade-off between production efficiency and rent-shifting, faced by abatement technology importing countries: The emissions tax maximizing domestic welfare is below the marginal damage of emissions if some of the abatement rent is captured by foreign technology suppliers, and it decreases as the share of imported technologies increases.

Suggested Citation

  • Idrissa G.-O. Sibailly, 2015. "On the pigouvian tax rule in an open economy: the case of abatement technology trade," Economics Bulletin, AccessEcon, vol. 35(4), pages 2733-2741.
    • Handle: RePEc:ebl:ecbull:eb-14-00927
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Pigouvian Taxes; Eco-Industry; Technology Licensing; End-of-pipe; International Trade; Environmental Goods and Services.;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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