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Environmental taxation: Pigouvian or Leviathan?

Author

Listed:
  • Isabelle Cadoret

    (Université Rennes, CNRS, CREM UMR6211, Condorcet Center for Political Economy)

  • Emma Galli

    (Sapienza University of Rome)

  • Fabio Padovano

    (Université Rennes, CNRS, CREM UMR6211, Condorcet Center for Political Economy
    Università Roma Tre)

Abstract

This paper empirically examines which type of fiscal levies are environmental taxes, by analyzing how governments actually use them. The theoretical literature is polarized between two alternative interpretations of environmental taxes: the Pigouvian and the Leviathan hypotheses, each leading to alternative testable hypotheses. We test them on a sample where the analysts’ discretionary evaluations are minimal, the EU-28 countries that committed themselves to correcting a negative environmental externality, the greenhouse gas emissions, by 2020. The estimates lend support to the strict Pigouvian hypothesis, while the Leviathan hypothesis appears less consistent with the data.

Suggested Citation

  • Isabelle Cadoret & Emma Galli & Fabio Padovano, 2021. "Environmental taxation: Pigouvian or Leviathan?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(1), pages 37-51, March.
    • Handle: RePEc:spr:epolin:v:48:y:2021:i:1:d:10.1007_s40812-020-00149-8
    DOI: 10.1007/s40812-020-00149-8
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    More about this item

    Keywords

    Environmental taxes; Pigouvian taxation; Leviathan government; GHG reduction; Arellano–Bond GMM;
    All these keywords.

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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