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Full-Text Articles in Social and Behavioral Sciences
The General Equilibrium Incidence Of Environmental Mandates, Don Fullerton, Garth Heutel
The General Equilibrium Incidence Of Environmental Mandates, Don Fullerton, Garth Heutel
Don Fullerton
Pollution regulations affect factor demands, relative returns, production, and output prices. In our model, one sector includes pollution as an input that can be a complement or substitute for labor or capital. For each type of mandate, we find conditions where more burden is on labor or on capital. Stricter regulation does not always place less burden on the better substitute for pollution. Also, restrictions on pollution per unit output create an “output-subsidy effect” on factor prices that can reverse the usual output and substitution effects. We find analogous effects for a restriction on pollution per unit capital.
Tax And Subsidy Combinations For The Control Of Car Pollution, Don Fullerton, Sarah West
Tax And Subsidy Combinations For The Control Of Car Pollution, Don Fullerton, Sarah West
Don Fullerton
Despite technological advances, an individual car’s emissions still cannot be measured reliably enough to impose a Pigovian tax. This paper explores alternative market incentives that could be used instead. We solve for second-best combinations of uniform taxes on gasoline, engine size, and vehicle age. For 1,261 individuals and cars in the 1994 Consumer Expenditure Survey, we record the car’s model, year, and number of cylinders. We then seek a corresponding car in data from the California Air Resources Board that shows the car’s engine size, fuel efficiency, and emissions per mile. We calculate the welfare improvement from a zero-tax scenario …
Combinations Of Instruments To Achieve Low-Carbon Vehicle-Miles, Don Fullerton, Daniel Karney
Combinations Of Instruments To Achieve Low-Carbon Vehicle-Miles, Don Fullerton, Daniel Karney
Don Fullerton
In cases where the first-best carbon tax and a reasonable second-best gasoline tax are unavailable, this paper demonstrates how alternative combinations of instruments can form economically-sound, environmentally-motivated policies for substantial reductions in vehicle carbon emissions. In order to implement alternative approaches successfully, our point is that policymakers may need to take a holistic approach when designing policy. This holistic approach would recognise that policies to reduce carbon emissions must be politically feasible, and that all sectors of the economy generate carbon emissions. A holistic approach would not focus just on one method of abatement, like encouraging low-carbon vehicle technologies, but …
Analytical General Equilibrium Effects Of Energy Policy On Output And Factor Prices, Don Fullerton, Garth Heutel
Analytical General Equilibrium Effects Of Energy Policy On Output And Factor Prices, Don Fullerton, Garth Heutel
Don Fullerton
Using an analytical general equilibrium model, we find solutions for the effect of energy policy on factor prices as well as output prices. We calibrate the model to the U.S. economy, and we consider a tax on carbon dioxide. By looking at expenditure and income patterns across household groups, we quantify the uses-side and sources-side incidence of the tax. When households are categorized either by annual income or by total annual consumption as a proxy for permanent income, the uses-side incidence is regressive. This result is robust to sensitivity analysis over various parameter values. The sources-side incidence can be progressive, …
Environmental Taxes, Don Fullerton, Andrew Leicester, Stephen Smith
Environmental Taxes, Don Fullerton, Andrew Leicester, Stephen Smith
Don Fullerton
This paper provides an overview of key economic issues in the use of taxation as an instrument of environmental policy. Part A reviews economic arguments for using taxes and other market mechanisms in environmental policy, discusses the choice between taxes directly on measured emissions or less-directly related to emissions, and considers the value of the revenue from environmental taxes. We argue that environmental tax revenues do not significantly alter economic constraints on tax policy, and that environmental taxes need to be designed and justified primarily by the cost-effective achievement of environmental goals. Part B discusses key areas where environmental taxes …