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Welfare effects of green tax reforms in one sector and two sector dynamic economies

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  • Mota, Rui Pedro
  • Domingos, Tiago

Abstract

The main focus of this paper is twofold. First is to design Pigouvian taxes for different kinds of environmental external effects on the market economy in order to be possible to say what is the relevant information in each situation. Second is to address the question of the welfare effects of using close to Pigouvian taxes in real economies. This is done by considering more general conditions than those used by Aronsson et al. (2003). In particular, we take the ecosystem dynamics as being density dependent, and we assume that there are errors in measuring both the consumers marginal utility of nature and its regeneration rate. Additionally, we derive cost benefit rules for a green tax reform on the context of a two sector economy, in particular, a final goods sector and a knowledge sector, considering two externalities - one environmental externality and one technology externality.

Suggested Citation

  • Mota, Rui Pedro & Domingos, Tiago, 2006. "Welfare effects of green tax reforms in one sector and two sector dynamic economies," MPRA Paper 13346, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13346
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    References listed on IDEAS

    as
    1. Thomas Aronsson & Karl-Gustaf Löfgren & Kenneth Backlund, 2004. "Welfare Measurement in Imperfect Markets," Books, Edward Elgar Publishing, number 2494.
    2. Thomas Aronsson & Karl-Gustaf Löfgren, 1998. "Green Accounting in Imperfect Market Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 273-287, April.
    3. Thomas Aronsson, 1999. "On Cost Benefit Rules for Green Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(1), pages 31-43, January.
    4. Aronsson, Thomas & Lofgren, Karl-Gustaf, 1999. "Pollution tax design and 'Green' national accounting," European Economic Review, Elsevier, vol. 43(8), pages 1457-1474, August.
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    More about this item

    Keywords

    Environmental externalities; Non-Pigouvian taxes; social cost benefit analysis;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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