Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 653: Environmental Policy and Product Specialization

Thomas Aronsson (), Lars Persson () and Tomas Sjögren ()
Additional contact information
Thomas Aronsson: Department of Economics, Umeå University, Postal: S 901 87 Umeå, Sweden
Lars Persson: 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 characterizes income and commodity taxation as the outcome of a noncooperative Nash game in a two-country economy where one of the countries produces an environmentally clean good, while the other produces a dirty good. Among the results, it is shown that the commodity tax on the dirty good implemented by each country does not contain any term that directly serves to correct for the external effect. Instead, the country producing the dirty good internalizes part of the domestic external effect by choosing a relatively high marginal income tax rate.

Keywords: Trade and Environment; Optimal Taxation; Externalities.

JEL-codes: F18; H21; H23

26 pages, March 15, 2005

Full text files 

DownloadAsset.action...Id=3&assetKey=ues653 PDF-file

Download statistics

Questions (including download problems) about the papers in this series should be directed to David Skog ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:umnees:0653This page generated on 2024-09-13 22:17:26.