Cheng, Wenli; Zhang, Dingsheng; CEMA - Department of Econometrics and Business Statistics, … - 2014
In this note, we introduce increasing returns to Bovenberg and Mooij's (1994) model as generalised in Fullerton (1997) and use an example to show that (1) even with a distortionary labor tax, the optimal environmental levy is greater than the Pigouvian rate; (2) the difference between tax on the...