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Comparison between optimal output tax and ad valorem tax for a polluting oligopolist under demand uncertainty

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  • Iltae Kim

    (Chonnam National University)

  • Sang-Ho Lee

    (Chonnam National University)

Abstract

This article examines the results of an optimal output tax and an optimal ad valorem tax for a polluting oligopolist under demand uncertainty and then compares them with conventional results under an assumption of certainty. We show that, for general representations of uncertainty, the optimal tax under uncertainty is less than that under certainty. Finally, we discuss some findings regarding tax rates and tax revenues and investigate the regulatory feasibility of implementing the optimal solutions.

Suggested Citation

  • Iltae Kim & Sang-Ho Lee, 2002. "Comparison between optimal output tax and ad valorem tax for a polluting oligopolist under demand uncertainty," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 5(1), pages 1-15, March.
    • Handle: RePEc:spr:envpol:v:5:y:2002:i:1:d:10.1007_bf03354021
    DOI: 10.1007/BF03354021
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