TY - JOUR
T1 - On atmosphere externality and corrective taxes
AU - Sheshinski, Eytan
PY - 2004/3
Y1 - 2004/3
N2 - It has been argued that in the presence of an 'Atmosphere Externality' and competitive behavior by households, a uniform commodity tax on the externality-generating good attains the first best. It is demonstrated, however, that if income redistribution is desirable then personalized taxes are required for a second-best optimum. Each of these taxes is the sum of a uniform (across households) tax and a component, positive or negative, which depends on the household's income and demand elasticities. Second-best optimal indirect taxes and rules for investment in externality-reducing measures are also considered.
AB - It has been argued that in the presence of an 'Atmosphere Externality' and competitive behavior by households, a uniform commodity tax on the externality-generating good attains the first best. It is demonstrated, however, that if income redistribution is desirable then personalized taxes are required for a second-best optimum. Each of these taxes is the sum of a uniform (across households) tax and a component, positive or negative, which depends on the household's income and demand elasticities. Second-best optimal indirect taxes and rules for investment in externality-reducing measures are also considered.
KW - Atmosphere externality
KW - Distributional considerations
KW - Optimal taxation
UR - http://www.scopus.com/inward/record.url?scp=0344196704&partnerID=8YFLogxK
U2 - 10.1016/S0047-2727(02)00224-4
DO - 10.1016/S0047-2727(02)00224-4
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AN - SCOPUS:0344196704
SN - 0047-2727
VL - 88
SP - 727
EP - 734
JO - Journal of Public Economics
JF - Journal of Public Economics
IS - 3-4
ER -
