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Pareto-Efficient International Taxation in the Presence of Environmental Externalities

Author

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  • Yoshitomo Ogawa
  • Akihiko Yanase

Abstract

This study analyzes Pareto-efficient international taxation, comprising commodity taxes, tariffs, and environmental taxes, in a multicountry economy. In such an economy, each country has a distinct revenue constraint and there are various types of cross-border environmental externalities. We show that Pareto-efficient international taxation is characterized by the standard Ramsey commodity tax rule, the collinearity of the tariff vector, and general-equilibrium Pigouvian environmental taxation. Our Pigouvian tax formula is applicable to a wide variety of contexts, including global, regional, and localized pollution, and it yields important suggestions for the single pricing of cross-border pollution.

Suggested Citation

  • Yoshitomo Ogawa & Akihiko Yanase, 2019. "Pareto-Efficient International Taxation in the Presence of Environmental Externalities," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 75(2), pages 111-126.
    • Handle: RePEc:mhr:finarc:urn:doi:10.1628/fa-2019-0007
    DOI: 10.1628/fa-2019-0007
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    Cited by:

    1. Cheng Haitao & Kato Hayato & Obashi Ayako, 2021. "Is Environmental Tax Harmonization Desirable in Global Value Chains?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 379-416, January.

    More about this item

    Keywords

    international taxation; environmental externalities; revenue constraint; single pricing;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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