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A Reconsideration of gDouble Dividends h Hypothesis in Taxation on Externalities

Author

Listed:
  • SUMINO, Koh

    (Department of Economics, Otaru University of Commerce)

  • YAMADA, Masatoshi

    (Graduate School of Economics, Osaka University)

Abstract

Bovenberg and Mooij (1994) and others pointed out that the optimal taxation on goods with external diseconomy both collects revenue and also corrects the external diseconomy by the goods, and thus it is said that the tax has gdouble dividends h. The purpose of the present paper is to examine whether the double-dividend arguments by Bovenberg and Mooij and others are appropriate when they are viewed from the traditional arguments of optimal and corrective (Pigovian) taxation. Based on their framework, we show that it should be evaluated differently from Bovenberg and Mooij whether double-dividend hypothesis holds or not, and that the hypothesis usually holds if it is appropriately defined.

Suggested Citation

  • SUMINO, Koh & YAMADA, Masatoshi, 2008. "A Reconsideration of gDouble Dividends h Hypothesis in Taxation on Externalities," Discussion Papers in Economics and Business 08-01, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0801
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    More about this item

    Keywords

    Optimal tax rule; external diseconomies; double-dividend hypothesis;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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