Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 600: A Note on Environmental Policy Reform, Distortionary Taxation and Imperfect Competition

Thomas Aronsson (), Karl-Gustaf Löfgren () and Tomas Sjögren ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Karl-Gustaf Löfgren: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Tomas Sjögren: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden

Abstract: This paper concerns the welfare effects of public abatement projects, and concentrates on the influence of distortionary taxes and imperfect competition in the labor market. In addition to the direct environmental benefits and costs of resource use, abatement policies give rise to welfare effects via the tax system as well as via changes in the employment. We also show how the cost benefit rule is modified, if the other policy instrument are optimally chosen conditional on the level of abatement.

Keywords: Environmental policy; distortionary taxation; the labor market

JEL-codes: H41; J51; J60

9 pages, December 17, 2002

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