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Mixed Taxation and Transboundary Externalities

Author

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  • Thomas Aronsson
  • Lars Persson
  • Tomas Sjögren

Abstract

This article concerns income taxation and commodity taxation in a multijurisdiction framework with transboundary environmental damage. The decision problem facing the government in each such jurisdiction is represented by a two-type model (with asymmetric information between the government and the private sector). We show how the possibility to influence the world market producer price adds mechanisms of relevance for redistribution and externality correction which, in turn, affect the domestic use of taxation. Finally, with the noncooperative Nash equilibrium as a reference case, we consider the welfare effects of policy coordination.

Suggested Citation

  • Thomas Aronsson & Lars Persson & Tomas Sjögren, 2014. "Mixed Taxation and Transboundary Externalities," Public Finance Review, , vol. 42(2), pages 254-282, March.
    • Handle: RePEc:sae:pubfin:v:42:y:2014:i:2:p:254-282
    DOI: 10.1177/1091142113487008
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    References listed on IDEAS

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    1. Bovenberg, A Lans & Goulder, Lawrence H, 1996. "Optimal Environmental Taxation in the Presence of Other Taxes: General-Equilibrium Analyses," American Economic Review, American Economic Association, vol. 86(4), pages 985-1000, September.
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    5. Ian W.H. Parry & Roberton C. Williams III & Lawrence H. Goulder, 2002. "When Can Carbon Abatement Policies Increase Welfare? The Fundamental Role of Distorted Factor Markets," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 25, pages 471-503, Edward Elgar Publishing.
    6. Thomas Aronsson Aronsson & Thomas Jonsson & Tomas Sjögren, 2006. "Environmental Policy and Optimal Taxation in a Decentralized Economic Federation," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(3), pages 437-454, September.
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    Cited by:

    1. Aronsson, Thomas & Sjögren, Tomas, 2018. "Optimal Taxation, Redistribution, and Environmental Externalities," International Review of Environmental and Resource Economics, now publishers, vol. 11(3), pages 233-308, August.

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