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A Note on Weak Double Dividends

Author

Listed:
  • Mustafa H. Babiker
  • Gilbert Metcalf
  • John Reilly

Abstract

A weak double-dividend is the proposition that the welfare improvement from a tax reform, where environmental taxes are used to lower distorting taxes, must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion. A general consensus has emerged that the weak double-dividend is an uncontroversial idea. We show in this note that a weak double-dividend need not hold in a world with multiple distortions.

Suggested Citation

  • Mustafa H. Babiker & Gilbert Metcalf & John Reilly, 2003. "A Note on Weak Double Dividends," Discussion Papers Series, Department of Economics, Tufts University 0307, Department of Economics, Tufts University.
    • Handle: RePEc:tuf:tuftec:0307
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    File URL: http://ase.tufts.edu/econ/papers/200307.pdf
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    Cited by:

    1. Gilbert E. Metcalf & Sergey Paltsev & John Reilly & Henry Jacoby & Jennifer F. Holak, 2008. "Analysis of U.S. Greenhouse Gas Tax Proposals," NBER Working Papers 13980, National Bureau of Economic Research, Inc.
    2. Yu-Bong Lai, 2009. "Is a Double Dividend Better than a Single Dividend?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(2), pages 342-363, June.
    3. Takeda, Shiro, 2007. "The double dividend from carbon regulations in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 21(3), pages 336-364, September.

    More about this item

    Keywords

    environmental tax policy; second-best taxation; general equilibrium analysis;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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