Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 522: International Cooperation over Green Taxes: On the Impossibility of Achieving a Probability-One Gain

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

Abstract: This paper concerns international coordination of environmental taxation. The main purpose is to study the global welfare effects that will arise, if there is an agreement between countries to slightly increase their emission taxes. We show that even if each individual country has chosen its prereform emission tax to be 'too low' in comparison with the marginal cost of the environmental damage caused by that particular country's emissions, implementation of the agreement will not necessarily increase the welfare level.

Keywords: Environmental taxation; global external effects

JEL-codes: D61; D62; H21; I31

24 pages, February 11, 2000

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