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Distorting Environmental Taxes: The Role of the Market Structure / Zweitbeste Umweltabgaben: Die Rolle der Marktstruktur bei internationalem Handel

Author

Listed:
  • Althammer Wilhelm

    (Handelshochschule Leipzig, Jahnallee 59, D-04109 Leipzig, Germany)

  • Buchholz Wolfgang

    (Institut für Volkswirtschaftslehre, Universität Regensburg, D-93040 Regensburg, Germany)

Abstract

In economies with perfect competition, environmental tax rates should be set equal to the equilibrium marginal damage. There are two basic reasons to depart from this first best rule: incomplete competition and the possibility of using environmental policy as a strategic trade instrument in open economies. In the first part of this paper, a general model is developed to analyse the interaction between these motives and the sign and size of the resulting distortion. Using this model, the cases typically treated in the literature can be described as special cases of a general formula. The second part of the analysis shows how the industry structure affects the second best choice of the environmental tax.

Suggested Citation

  • Althammer Wilhelm & Buchholz Wolfgang, 1999. "Distorting Environmental Taxes: The Role of the Market Structure / Zweitbeste Umweltabgaben: Die Rolle der Marktstruktur bei internationalem Handel," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 219(3-4), pages 257-270.
    • Handle: RePEc:jns:jbstat:v:219:y:1999:i:3-4:p:257-270:n:1002
    DOI: 10.1515/jbnst-1999-3-417
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