Boon or bane? On productivity and environmental regulation

As climate change has gained more attention in the last decade, effects of environmental regulation on productivity are important to design green tax reforms. This study examines the impacts of environmental taxes and spillovers on technical efficiency, using data on Central European manufacturing firms, from 2009 to 2017. The results highlight strong effects of environmental taxation on productivity. Besides, downstream energy taxation does not affect productivity, while upstream taxes decrease technical efficiency. Downstream pollution taxation decreases productivity, whereas upstream taxation spurs technical efficiency. This study contributes to the literature by investigating heterogeneous tax effects across industries, involving tax spillovers and considering endogeneity issues.

Model Analysis of Optimal Pollution Tax under Environment Rent Philosophy

This paper uses the concept of environment rent philosophy to explain rationale for government taxation and principles of taxation, and uses mathematical models to specifically discuss practical problems of government pollution taxation under this philosophy. The model provides mathematical equations for optimal decision-making by consumers, producers, and government and analyzes the impact of changes in taxation rates on the three parties.

Emission taxes when pollution depends on location

It is well known that an efficient pollution taxation scheme should charge each source according to its specific marginal contribution to social damages. Despite significant advances in environmental assessment, geographic information systems and data analysis, this requirement would impose technical, informational and administrative expenses that most regulators – notably in developing countries – seem unable to afford. This paper shows that it can actually be less demanding than it seems. If polluters are price-takers, for instance, in a context where the affected population concentrates at a given location, then the optimal emission tax will disregard a source's location. Otherwise, the adjustment of the optimal tax to location will depend on the extent of a polluter's market power.

Environmental policy, comparative advantage, and welfare for a developing economy

This paper investigates the effects of pollution taxation for a dual developing economy with a separate abatement sector. Due to the real rigidity of the urban wage, pollution taxes raise the cost of the urban good and hence its relative price. This suggests that because of flexible rural wages, the developing economy tends to have a comparative advantage in the rural good which may be less polluting. Moreover, the higher price of the urban good worsens the urban unemployment ratio. The optimal tax on pollution is thus lower than the marginal environmental damage to the economy.

Second-Best Pollution Taxation and Environmental Quality

This paper deals with second-best pollution taxation by investigating allocations instead of the corresponding tax rates. Assuming certain restrictions on utility and that the marginal revenue from environmental taxation is positive, it is shown that environmental quality is higher in second best where only distortionary taxes are used to finance public expenditures than in the first-best optimum where lump-sum taxes are available.