Curb Your Enthusiasm for Pigouvian Taxes

2014 ◽  
Author(s):  
Victor Fleischer
Keyword(s):  
Pigouvian Taxes

scholarly journals The Welfare Impact of Second-Best Uniform-Pigouvian Taxation: Evidence from Transportation

2018 ◽  
Vol 10 (4) ◽  
pp. 211-242 ◽  
Author(s):  
Christopher R. Knittel ◽  
Ryan Sandler
Keyword(s):  
Market Failure ◽  
Social Cost ◽  
Deadweight Loss ◽  
Negative Externalities ◽  
Market Outcomes ◽  
Welfare Impact ◽  
Second Best ◽  
Pigouvian Taxes ◽  
Gasoline Taxes ◽  
Optimal Taxes

When consumers or firms don’t face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, but it may be infeasible to tax the externality directly. The alternative, taxing a related product, will be second-best. In this paper, we show that in the presence of heterogeneous externalities and elasticities, this type of indirect tax performs poorly. In our empirical application, gasoline taxes to address pollution externalities, less than a third of the deadweight loss of the externality is addressed by second-best optimal taxes. (JEL D62, H21, H23, H71, H76, Q53, R48)

International Market Mechanisms

2016 ◽  
Author(s):  
Shi-Ling Hsu
Keyword(s):  
International Market ◽  
Economic Benefits ◽  
Market Mechanism ◽  
External Costs ◽  
Pigouvian Tax ◽  
Market Mechanisms ◽  
Permit Trading ◽  
Pigouvian Taxes ◽  
The Social

This chapter describes the role of international market mechanisms in reducing pollution and the costs of doing so. It looks into two mechanisms established by economists John H. Dales and Arthur Cecil Pigou. Dales propounded the mechanism of ‘pollution permit-trading’ which, instead of regulating pollution on a source-by-source or emitter class-by-emitter class basis, a regulatory agency from the beginning would limit the overall amount of pollution allowed. Firms could then trade amongst themselves, effectively using the market to determine which of them should be able to pollute, how much, and when. The other market mechanism is the Pigouvian tax, which is the tax levied per unit of pollution emitted. By pricing these external costs and forcing polluters to consider them in their private calculus, Pigouvian taxes force polluters to balance the social costs and their private economic benefits of polluting.

scholarly journals Environmental Exigencies and the Efficient Voter Rule

Economies ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 100
Author(s):  
David A. Anderson
Keyword(s):  
Climate Change ◽  
Mass Extinction ◽  
Decision Makers ◽  
Pigouvian Taxes ◽  
Optimal Decisions ◽  
Private Incentives ◽  
Manufactured Goods ◽  
Energy Transportation ◽  
Coasian Bargaining ◽  
Voting Mechanism

Externality problems hinder solutions to existential threats, including climate change and mass extinction. To avert environmental crises, policymakers seek mechanisms that align private incentives with societal exigencies. Successful solutions bring individuals to internalize the broad repercussions of their behavior. In some cases, privatization, Coasian bargaining, or Pigouvian taxes effectively place the weight of externalities on the relevant decision makers. Yet, the available remedies often fail to provide satisfactory outcomes, and inefficiencies persist in the markets for energy, transportation, and manufactured goods, among others. This article explains how a simple voting mechanism can achieve socially optimal decisions about many of the innumerable externality problems that remain.

Corrective Taxes and Auctions of Rights in the Control of Externalities: A Reply

1981 ◽  
Vol 9 (4) ◽  
pp. 479-484 ◽  
Author(s):  
Randall G. Holcombe ◽  
Roger E. Meiners
Keyword(s):  
Real World ◽  
The Real ◽  
Pigouvian Taxes ◽  
Pollution Rights

Our original article noted that auctions of pollution rights could increase a tendency toward monopoly in the offending industry. Professor Oates has provided some insightful comments in arguing for auctions rather than Pigouvian taxes, but the validity of the argument in our original article is not affected. Oates's suggestions for pricing externalities in the real world are a welcome addition to the discussion, but there are some reasons to believe that his approach would not be optimal under all circumstances.

scholarly journals Issues in the Design of Environmental Excise Taxes

1994 ◽  
Vol 8 (1) ◽  
pp. 133-151 ◽  
Author(s):  
Thomas A Barthold
Keyword(s):  
Environmental Taxes ◽  
Design Issues ◽  
Excise Tax ◽  
Pigouvian Taxes ◽  
Excise Taxes

This paper explores economic, political, and practical issues that arise in the design of environmental taxes. The observed dearth of Pigouvian taxes may result from perceived political or practical problems in the design of such taxes. The author provides a taxonomy for assessing design issues: (1) what is taxed; (2) who is to pay; (3) how large is the tax; and (4) accommodations for ancillary policy concerns. He uses this taxonomy to address issues of design to achieve economically efficient and administratively feasible outcomes. The author illustrates these points with discussion of the recently enacted excise tax on ozone-depleting chemicals.

Comparing Specific and Ad Valorem Pigouvian Taxes and Output Quotas

1996 ◽  
Vol 63 (2) ◽  
pp. 388 ◽  
Author(s):  
Mark Dickie ◽  
Gregory A. Trandel
Keyword(s):  
Pigouvian Taxes ◽  
Ad Valorem

Durable Emissions and Optimal Pigouvian Taxes

2004 ◽  
Vol 32 (4) ◽  
pp. 441-449 ◽  
Author(s):  
Rajeev K. Goel ◽  
Edward W. T. Hsieh
Keyword(s):  
Pigouvian Taxes
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