Nowadays, an important debate in the international economies is the problem of greenhouse gas emissions and climate change related. Discussions begin to gain the world with the signature of the Kyoto Protocol (1997), where an international agreement was reached to reduce global emissions....

This study develops a theoretical general equilibrium model to examine optimal externality tax policy in the presence of externalities linked to one another through markets rather than technical production relationships. Analytical results reveal that the second-best externality tax rate may be...