The paper examines the incentives of Governments to introduce green taxes instead of emission licenses. We take into account the fact that licenses are durable goods, and distinguish Governements that may have fiscal goals as well as ecological ones. Taxes solve the credibility problem a...

This paper analyzes the incentive effects of pollution taxes versus pollution permits for a revenue maximizing Government that also pursues environmental objectives. In our model, pollution permits are analyzed as durable goods, and the leasing of pollution permits is seen as an equivalent to a...

This paper analyzes the incentive effects of pollution taxes versus pollution permits for a budget oriented Government. Pollution permits are analyzed as durable goods, and a pollution tax is seen as an equivalent to leasing pollution permits. First, a general model is developed and then four...