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Optimal taxation, global externalities and Labor mobility
Umeå University, Faculty of Social Sciences, Department of Economics.
Department of Economics, Uppsala University, Uppsala, Sweden.
2003 (English)In: Journal of Public Economics, ISSN 0047-2727, E-ISSN 1879-2316, Vol. 87, no 12, 2749-2764 p.Article in journal (Refereed) Published
Abstract [en]

This paper concerns transboundary environmental problems in the context of an optimal tax model. We assume that part of the labor force is mobile across countries, and that the set of tax instruments includes a nonlinear income tax and a commodity tax on the ‘dirty’ good that is causing damage to the environment. The purpose is to compare the (globally optimal) second best policy of a cooperative equilibrium with the policy implicit in a noncooperative equilibrium. We show that the commodity taxes differ between equilibria because of: (i) transboundary externalities not internalized by national governments, (ii) interaction effects between environmental and other policies, and (iii) labor mobility.

Place, publisher, year, edition, pages
Elsevier, 2003. Vol. 87, no 12, 2749-2764 p.
Keyword [en]
Transboundary externalities, Fiscal federalism, Optimal taxation
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Research subject
URN: urn:nbn:se:umu:diva-16235DOI: 10.1016/S0047-2727(02)00077-4OAI: diva2:155908
Available from: 2007-09-05 Created: 2007-09-05 Last updated: 2012-08-27Bibliographically approved

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