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Environmental Taxes And The Double-Dividend Hypothesis: Did You Really Expect Something For Nothing?, Don Fullerton, Gilbert Metcalf
Environmental Taxes And The Double-Dividend Hypothesis: Did You Really Expect Something For Nothing?, Don Fullerton, Gilbert Metcalf
Don Fullerton
The "double-dividend hypothesis" suggests that increased taxes on polluting activities can provide two kinds of benefits. The first dividend is an improvement in the environment, and the second dividend is an improvement in economic efficiency from the use of environmental tax revenues to reduce other taxes such as income taxes that distort labor supply and saving decisions. In this paper, we make four main points. First, the validity of the double-dividend hypothesis cannot logically be settled as a general matter. Second, the focus on revenue in this literature is misplaced. We demonstrate that three policies have equivalent impacts on the …
Policies For Green Design, Don Fullerton, Wenbo Wu
Policies For Green Design, Don Fullerton, Wenbo Wu
Don Fullerton
A simple general equilibrium model is used to analyze disposal-content fees, subsidies for recyclable designs, unit-pricing of household disposal, deposit-refund systems, and manufacturer “take-back” requirements. Firms use primary and recycled inputs to produce output that has two “attributes”: packaging per unit output, and recyclability. If households pay the social cost of disposal, then they send the right signals to producers to reduce packaging and to design products that can more easily be recycled. If garbage is collected for free, then socially optimum attributes can still be achieved by a tax on producers’ use of packaging and subsidy to recyclable designs.