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Does wage bargaining justify environmental policy coordination?
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
Umeå University, Faculty of Social Sciences, Department of Economics.
2008 (English)Report (Other academic)
Abstract [en]

This paper analyzes the welfare consequences of coordinated tax reforms in an economy where a transboundary environmental externality and an international wage bargaining externality are operative at the same time. We assume that the wage in each country is decided upon in a bargain between trade-unions and firms, and the wage bargaining externality arises because the fall-back profit facing firms depends on the profit they can earn if moving production abroad. Using the noncooperative Nash equilibrium as a reference case, our results imply that the international wage bargaining externality may either reinforce or weaken the welfare gain of a coordinated increase in environmental taxation, depending on (among other things) how the reform affects the wage. For a special case, we also derive an exact condition under which a coordinated increase in the environmental tax leads to higher welfare.

Place, publisher, year, edition, pages
2008.
Series
Umeå economic studies, ISSN 0348-1018 ; 754
Keyword [en]
environmental taxes, externalities, policy coordination, trade-unions
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-3622OAI: oai:DiVA.org:umu-3622DiVA: diva2:142411
Available from: 2008-11-13 Created: 2008-11-13 Last updated: 2011-09-28
In thesis
1. Environmental policy and transboundary externalities: coordination and commitment in open economies
Open this publication in new window or tab >>Environmental policy and transboundary externalities: coordination and commitment in open economies
2008 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis consists of an introductory chapter and four papers, which relate to environmental policy in the presence of transboundary environmental damage. Paper [I] concerns public policy in a multi-jurisdiction framework with transboundary environmental damage. Each jurisdiction is assumed large in the sense that its government is able to infuence the world-market producer price of the externality-generating good. This gives rise to additional incentives of relevance for national public policy in the non-cooperative Nash equilibrium. With the uncoordinated equilibrium as the reference case, the welfare effects from coordinated changes in public policy variables are analyzed. Paper [II] analyses welfare effects of coordinated changes in environmental and capital taxation in the presence of transboundary environmental externalities and wage bargaining externalities. In the wage bargaining between frms and labor unions, firms use the threat of moving abroad to moderate wage claims, which means that domestic policy infuences wage formation abroad. The specific framework implies welfare effects of policy coordination that correspond to each of the respective international interaction mentioned above. In paper [III], national governments face political pressure from environmental and industrial lobby groups, while pollution taxes are determined in an international negotiation. It is shown that a general increase in the environmental concern and the weight the governments attach to social welfare both tend to increase the pollution tax. However, allowing for asymmetries between the countries means that a general increase in the environmental concern has the potential to reduce the pollution tax. Paper [IV] studies national environmental policies in an economic federation characterized by decentralized leadership. The federal government sets emission targets for each member country, which are implemented by the national governments. Although all national governments have commitment power vis-à-vis the federal government, one of them also has commitment power vis-à-vis the other member countries. This creates incentives to act strategically toward the federal government, as well as toward other members.

Place, publisher, year, edition, pages
Umeå: Nationalekonomi, 2008. 25 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 755
Keyword
environmental policy, transboundary externalities, lobbying, international negotiations, policy coordination, endogenous world-market prices, optimal taxation, economic federation
National Category
Economics
Identifiers
urn:nbn:se:umu:diva-1917 (URN)978-91-7264-693-3 (ISBN)
Public defence
2008-12-04, s104, Samhällsvetarhuset, Umeå universitet, Umeå, 13:15
Opponent
Supervisors
Available from: 2008-11-13 Created: 2008-11-13 Last updated: 2011-09-28Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
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  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
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