Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/18847
Authors: 
Hadjiyiannis, Costas
Hatzipanayotou, Panos
Michael, Michael S.
Year of Publication: 
2004
Series/Report no.: 
CESifo working papers 1208
Abstract: 
The paper examines the interaction among taxes on factors income, environmental quality and welfare. We construct a two-country regional block model with capital mobility and crossborder pollution. Pollution in the two countries is simultaneously abated by the private sector, in response to a pollution tax and by the public sector utilizing income and pollution tax revenue. We demonstrate, among other things, that due to the existence of cross-border pollution in many cases the Nash optimal policy on capital income is a positive tax, even if taxes on the income of immobile factors are chosen optimally. This tax rate increases with the degree of cross-border pollution.
Subjects: 
optimal income taxes
public pollution abatement
cross-border pollution
capital mobility
JEL: 
F18
F15
F22
H21
Document Type: 
Working Paper

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