Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30618
Authors: 
Christiansen, Vidar
Smith, Stephen
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper 2793
Abstract: 
Much of the literature on externalities has considered taxes and direct regulation as alternative policy instruments. Both instruments may in practice be imperfect, reflecting informational deficiencies and other limitations. We analyse the use of taxes and regulation in combination, to control externalities arising from individual consumption behaviour. We consider cases where taxes are either imperfectly differentiated to reflect individual differences in externalities, or where some consumption escapes taxation. In both cases we characterise the optimal instrument mix, and show how changing the level of direct regulation alters the optimal externality tax.
Subjects: 
externalities
Pigouvian taxes
regulations
JEL: 
H21
H23
Document Type: 
Working Paper

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