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An additive tax and subsidy for controlling automobile pollution

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  • Robert Kohn

Abstract

It is well known that a unit tax on the emissions of polluting firms and an equal unit subsidy for emissions abated are not symmetrical instruments. However, when no entry-exit conditions are at stake, as in the case of polluting households, the tax and subsidy are equivalent. Moreover, any combination of the two, summing to marginal pollution damage, is also efficient. This strong result is applied to the case of an economy in which each household owns an automobile. It also extends to the case in which some households rely on mass-transit or car-pooling, provided that such households also receive the subsidy.

Suggested Citation

  • Robert Kohn, 1996. "An additive tax and subsidy for controlling automobile pollution," Applied Economics Letters, Taylor & Francis Journals, vol. 3(7), pages 459-462.
    • Handle: RePEc:taf:apeclt:v:3:y:1996:i:7:p:459-462
    DOI: 10.1080/758540806
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    References listed on IDEAS

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    1. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249.
    2. Stevens, Brandt K., 1988. "Fiscal implications of effluent charges and input taxes," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 285-296, September.
    3. Kohn, Robert E., 1994. "Alternative property rights to wetland externalities," Ecological Economics, Elsevier, vol. 10(1), pages 61-68, May.
    4. John Pezzey, 1992. "The Symmetry between Controlling Pollution by Price and Controlling It by Quantity," Canadian Journal of Economics, Canadian Economics Association, vol. 25(4), pages 983-991, November.
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    1. Don Fullerton & Li Gan & Miwa Hattori, 2015. "A model to evaluate vehicle emission incentive policies in Japan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(1), pages 79-108, January.
    2. Fullerton Don & West Sarah E, 2010. "Tax and Subsidy Combinations for the Control of Car Pollution," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-33, February.
    3. Ye Feng & Don Fullerton & Li Gan, 2013. "Vehicle choices, miles driven, and pollution policies," Journal of Regulatory Economics, Springer, vol. 44(1), pages 4-29, August.
    4. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March.
    5. Mazumder, Diya B., 2014. "Biofuel subsidies versus the gas tax: The carrot or the stick?," Energy Economics, Elsevier, vol. 44(C), pages 361-374.
    6. Fullerton, Don & West, Sarah E., 2002. "Can Taxes on Cars and on Gasoline Mimic an Unavailable Tax on Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 135-157, January.

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