Optimal Taxation and Transboundary Externalities - Are Endogenous World Market Prices Important?

This paper concerns income and commodity taxation in a multi-jurisdictional framework with transboundary environmental damage. We assume that each jurisdiction is large in the sense that its government is able to influence the world market prices via public policy. In such a framework, a noncooperative Nash equilibrium does not only imply that the commodity tax on the externality-generating good is inefficiently low seen from the perspective of global well-being; it also means that the marginal income tax rate is inefficiently high, and that too much resources are spent on public goods. With the noncooperative Nash equilibrium as a starting point, we also consider the welfare effects of policy coordination with respect to taxation and public expenditures.Trade and Environment; Optimal Taxation; Externalities

Environmental Policy and Product Specialization

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.Trade and Environment; Optimal Taxation; Externalities.

Mixed Taxation, Public Goods and Transboundary Externalities: A Model with Large Jurisdictions

This paper concerns income taxation, commodity taxation, production taxation and public good provision in a multi-jurisdiction framework with transboundary environmental damage. We assume that each jurisdiction is large in the sense that its government is able to influence the world-market producer price of the externality-generating commodity. The decision-problem facing the government in each such jurisdiction is represented by a two-type model (with asymmetric information between the government and the private sector). We show how the possibility to influence the world-market producer price adds mechanisms of relevance for redistribution and externality-correction which, in turn, affect the domestic use of taxation and public goods. Finally, with the noncooperative Nash equilibrium as a reference case, we consider the welfare effects of policy coordination.Trade and Environment; Optimal Taxation; Externalities

Structure and water exchange of hydrated oxo halo ions in aqueous solution using QMCF MD simulation, large angle X-ray scattering and EXAFS

Theoretical ab initio quantum mechanical charge field molecular dynamics (QMCF MD) has been applied in conjunction with experimental large angle X-ray scattering (LAXS) and EXAFS measurements to study structure and dynamics of the hydrated oxo chloro anions chlorite, ClO2-, chlorate, ClO3-, and perchlorate, ClO4-. In addition, the structures of the hydrated hypochlorite, ClO-, bromate, BrO3-, iodate, IO3- and metaperiodate, IO4-, ions have been determined in aqueous solution by means of LAXS. The structures of the bromate, metaperiodate, and orthoperiodate, H2IO63-, ions have been determined by EXAFS as solid sodium salts and in aqueous solution as well. The results show clearly that the only form of periodate present in aqueous solution is metaperiodate. The Cl-O bond distances in the hydrated oxo chloro anions as determined by LAXS and obtained in the QMCF MD simulations are in excellent agreement, being 0.01-0.02 angstrom longer than in solid anhydrous salts due to hydration through hydrogen bonding to water molecules. The oxo halo anions, all with unit negative charge, have low charge density making them typical structure breakers, thus the hydrogen bonds formed to the hydrating water molecules are weaker and more short-lived than those between water molecules in pure water. The water exchange mechanism of the oxo chloro anions resembles those of the oxo sulfur anions with a direct exchange at the oxygen atoms for perchlorate and sulfate. The water exchange rate for the perchlorate ion is significantly faster, tau(0.5) = 1.4 ps, compared to the hydrated sulfate ion and pure water, tau(0.5) = 2.6 and 1.7 ps, respectively. The angular radial distribution functions show that the chlorate and sulfite ions have a more complex water exchange mechanism. As the chlorite and chlorate ions are more weakly hydrated than the sulfite ion the spatial occupancy is less well-defined and it is not possible to follow any well-defined migration pattern as it is difficult to distinguish between hydrating water molecules and bulk water in the region close to the ions

Does Wage Bargaining Justify Environmental Policy Coordination?

This paper analyzes the welfare consequences of coordinated tax reforms in an economy where a transboundary environmental externality and an international wage bargaining externality are operative at the same time. We assume that the wage in each country is decided upon in a bargain between trade-unions and firms, and the wage bargaining externality arises because the fall-back profit facing firms depends on the profit they can earn if moving production abroad. Using the noncooperative Nash equilibrium as a reference case, our results imply that the international wage bargaining externality may either reinforce or weaken the welfare gain of a coordinated increase in environmental taxation, depending on (among other things) how the reform affects the wage. For a special case, we also derive an exact condition under which a coordinated increase in the environmental tax leads to higher welfare.Environmental taxes; externalities; policy coordination; trade-unions

Optimal Taxation and Transboundary Externalities -Are Endogenous World Market Prices Important? *

Abstract This paper concerns income and commodity taxation in a multi-jurisdictional framework with transboundary environmental damage. We assume that each jurisdiction is large in the sense that its government is able to influence the world market prices via public policy. In such a framework, a noncooperative Nash equilibrium does not only imply that the commodity tax on the externality-generating good is inefficiently low seen from the perspective of global well-being; it also means that the marginal income tax rate is inefficiently high, and that too much resources are spent on public goods. With the noncooperative Nash equilibrium as a starting point, we also consider the welfare effects of policy coordination with respect to taxation and public expenditures. JEL Classification: F18, H 21, H23