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Environmental Taxes and Wage Setting Structure

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  • Juan Carlos Bárcena-Ruiz
  • María Begoña Garzón

Abstract

The literature on the environment shows that imperfect competition in global markets creates a strategic interaction between governments that can lead to the ineficient distortion of environmental taxes. This literature does not consider that workers can set up different organizational structures to set wages. We assume that under decentralized wage setting there is an independent union in each irm while under centralized wage setting there is an industry-wide union that sets the wages of all irms. We show that under a decentralized structure governments choose environmental taxes closer to those which are socially eficient than those chosen under a centralized structure. However, environmental damage is greater in the former case.

Suggested Citation

  • Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2009. "Environmental Taxes and Wage Setting Structure," Prague Economic Papers, Prague University of Economics and Business, vol. 2009(4), pages 353-365.
    • Handle: RePEc:prg:jnlpep:v:2009:y:2009:i:4:id:359:p:353-365
    DOI: 10.18267/j.pep.359
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    More about this item

    Keywords

    international trade; oligopoly; environmental taxes; unions´ structure;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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