Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/46259 
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper No. 3259
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This study develops a theoretical general equilibrium model to examine optimal externality tax policy in the presence of externalities linked to one another through markets rather than technical production relationships. Analytical results reveal that the second-best externality tax rate may be greater or less than the first-best rate, depending largely on the elasticity of substitution between the two externality-generating products. These results are explored empirically for the case of greenhouse gas from fossil fuel and nitrogen emissions associated with biofuels.
Subjects: 
second-best tax
multiple externalities
biofuel
GHG emissions
nitrogen leaching
JEL: 
D50
H23
Q58
Document Type: 
Working Paper
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