Transboundary Pollution From Consumption In A Reciprocal Dumping Model

2005 ◽  
Vol 5 (2) ◽  
pp. 1850037 ◽  
Author(s):  
M. Ozgur Kayalica ◽  
Olgay Kayalica
Keyword(s):  
Consumer Surplus ◽  
Transboundary Pollution ◽  
Tax Revenues ◽  
Global Welfare ◽  
Cooperative Solutions ◽  
Homogeneous Good ◽  
Pareto Improving ◽  
Consumption Taxes ◽  
Uniform Reduction ◽  
Reciprocal Dumping

We analyse transboundary pollution externalities caused by consumption of goods. The model is of a reciprocal dumping type in which there are two countries and two firms. Each firm produces a homogeneous good to be consumed in both markets. There are two policies available to the governments of the two countries: consumption taxes and import tariffs. We characterise the Nash optimal levels of the instruments in the two countries. Our results suggest that the conditions satisfying higher consumption taxes in one country satisfy lower tariffs in that country. It is found that starting from non-cooperative solutions, an infinitesimal uniform reduction is unambiguously Pareto improving for each country and for the global welfare. This is because the gain from an increase in consumer surplus due to reform is larger than the loss in the tax revenues of the governments. Moreover, a revenue neutral reform which increases consumption taxes and reduce tariffs, is strictly Pareto improving.

RECIPROCAL DUMPING AND ENVIRONMENTAL POLICES

2017 ◽  
Vol 3 (6) ◽  
pp. 27
Author(s):  
Rafael S. Espinosa Ramírez
Keyword(s):  
Environmental Policy ◽  
Policy Reform ◽  
Market Size ◽  
Local Production ◽  
The Social ◽  
Global Welfare ◽  
The Government ◽  
The Cost ◽  
Uniform Reduction ◽  
Reciprocal Dumping

In a reciprocal dumping model of trade we analyse the effect of environmental policy reform on welfare in the presence of unemployment and repatriated profits. Pollution quota, used by the government in each country, restricts the local production and reduces the social harmful pollution. However, this quota is a barrier of trade which inhibits the employment and consumers surplus benefit. Bearing in mind this, both countries agree an infinitesimal and proportionate uniform reduction in pollution quota. In both cases global welfare will increase if marginal disutility of pollution is larger than the cost for abating pollution. The effect on each country will depend on the market size and marginal technological costs. Under the same conditions, when both countries agree harmonisation in pollution quotas the global welfare increase but the effect on the welfare of each country will be different.

The Built-In Flexibility of Income and Consumption Taxes in OECD Countries

2017 ◽  
pp. 162-170
Author(s):  
Binhan Elif Yılmaz ◽  
Sinan Ataer
Keyword(s):  
Income Elasticity ◽  
National Income ◽  
Oecd Countries ◽  
Fiscal Policies ◽  
Tax System ◽  
Tax Revenues ◽  
Cyclical Fluctuations ◽  
Relative Change ◽  
Consumption Taxes ◽  
Automatic Stabilizers

Compatible with a variety of cyclical fluctuations in fiscal policy, is the automatic stabilising fiscal policies. There is a need to calculate the income elasticity of tax for relieving the effects of cyclical fluctuations. Income elasticity of tax, that is tax revenue have relative change, the ratio of the relative change in national income. This ratio must be bigger than 1 to label a tax system as elastic. If this ratio is bigger than 1, this situation also show the tax system has an automatic stabilizing feature. By that way, without any changes in tax structure, tax revenues increase in the deflation times and decrease in the inflation times. The automatically compensatory movement of tax revenues, generally referred to as “built-in flexibility”, has received increasing attention. The aim of this study is examining the existence of automatic stabilizers in the OECD countries by evaluating the income elasticity of income and consumption taxes and by making cross-countries comparatives.

Cognitive Responses to Partitioned Pricing of Consumption Taxes: Consequences for State and Local Tax Revenues

2014 ◽  
Vol 37 (1) ◽  
pp. 183-204 ◽  
Author(s):  
Cynthia Blanthorne ◽  
Michael L. Roberts
Keyword(s):  
Data Availability ◽  
Sales Tax ◽  
Cognitive Responses ◽  
Consumer Spending ◽  
Structural Variations ◽  
Excise Tax ◽  
Tax Revenues ◽  
State And Local ◽  
Consumption Taxes ◽  
The U.S

ABSTRACT How do taxpayers respond cognitively to add-on sales taxes versus all-inclusive excise taxes? If structural variations produce cognitive differences, then do the differences affect buying behavior? These are important questions because consumer spending drives the U.S. economy and directly determines the amount of tax revenues collected from consumption taxes. If the negative opinion that people have about taxes (Tax Foundation 2009) increases the saliency of the tax, then an add-on sales tax might decrease consumer spending more than an all-inclusive excise tax pricing structure. Instead, results suggest that demand is higher when the add-on component is a sales tax as compared to an excise tax that is embedded into the total price. The effects on demand are even more pronounced and people recall lower prices when the add-on sales tax is presented as a percentage of the base price—as is generally the case in the U.S.—rather than as an additional currency component. Data Availability: Contact the authors.

scholarly journals Trade and commodity taxes as environmental instruments in an open economy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Onur A. Koska ◽  
Frank Stähler ◽  
Onur Yeni
Keyword(s):  
Environmental Pollution ◽  
Open Economy ◽  
Bilateral Trade ◽  
Transboundary Pollution ◽  
Trade Policies ◽  
Content Type ◽  
Commodity Taxes ◽  
Trading Partners ◽  
Domestic Policies ◽  
Reciprocal Dumping

PurposeIn a simple reciprocal dumping model of trade, this study scrutinizes the strategic role of trade and commodity taxes as environmental instruments when consumption of an imported product generates pollution. The results suggest that for sufficiently small values of the marginal disutility from pollution, commodity taxes can be preferred over import tariffs, and compared to the case of trade policies, free trade can be welfare dominating even for higher values of the marginal disutility from pollution when commodity taxes are used strategically as environmental instruments.Design/methodology/approachThe authors employ a reciprocal dumping model of trade.FindingsA sufficiently high marginal disutility from pollution (or sufficient asymmetries between the countries in terms of their marginal disutility from pollution) may jeopardize bilateral trade, especially if countries are given the option to set tariffs freely for imported goods (consumption of which generate environmental pollution). For sufficiently weak transboundary pollution and sufficiently low marginal disutility from pollution, (1) both Nash trade and domestic policies may prove to be helpful in addressing consumption-based pollution, and (2) it is possible to show in such a case that Nash domestic policies may be preferred over Nash trade policies, especially when both transboundary pollution and the trading partner's marginal disutility from pollution are sufficiently low.Originality/valueThe novel contribution of this paper is (1) to capture asymmetries among trading partners in terms of how much they account for environmental pollution when deciding on their (domestic/trade) policy measures and (2) to focus on environmental degradation that is caused by final consumption of a product imported from a trading partner.

Consumption Taxes, Income Taxes, and Revenue Sensitivity: States and the Great Recession

2017 ◽  
Vol 47 (2) ◽  
pp. 349-381
Author(s):  
Howard Chernick ◽  
Cordelia Reimers
Keyword(s):  
Great Recession ◽  
Income Tax ◽  
Income Taxes ◽  
Consumption Tax ◽  
Income Class ◽  
The Great Recession ◽  
Income Distributions ◽  
Tax Revenues ◽  
State Income ◽  
Consumption Taxes

This article uses an income-distributional approach to state tax sensitivity to examine the assumption that consumption taxes are more stable than income taxes. We estimate the 2007 to 2009 change in tax revenues as a function of state income distributions and tax burdens by income class. We estimate tax burdens as a function of income tax shares and consumption tax shares. We then simulate the change in tax revenues with tax shares at the national average. If high-income-tax states were to lower their reliance on this tax, the revenue decline during the recession would have been greater. For high consumption tax states, the revenue decline under higher income tax shares would have been smaller. Had they shifted toward consumption taxes, income tax reliant states would not have reduced the cyclical sensitivity of tax revenues during the Great Recession. The interaction between tax burdens and recession shocks by income class is key to these results.

scholarly journals Economies of Scope, Entry Deterrence and Welfare

2013 ◽  
Vol 13 (1) ◽  
pp. 419-452 ◽  
Author(s):  
Cesaltina Pacheco Pires ◽  
Margarida Catalão-Lopes
Keyword(s):  
Consumer Surplus ◽  
Entry Deterrence ◽  
Economies Of Scope ◽  
Scope Economies ◽  
Expansion Strategy ◽  
Global Welfare ◽  
Parameter Values ◽  
The Impact

Abstract This paper develops a model where the incumbent may expand to a related market to signal economies of scope and deter entry in the former market. We show that the incumbent only expands when scope economies are large enough. Thus expansion is a signal of larger economies of scope and, for certain parameter values, leads to entry deterrence. Although our game is two-period, the expansion strategy creates a long-term advantage. We further investigate the implications of prohibiting an entry-deterrent expansion. A major finding is that, in our model, this prohibition always decreases consumer surplus. In terms of global welfare, the impact is ambiguous but negative for many parameter values.

scholarly journals Price Regulation in Oligopolistic Markets

2012 ◽  
Vol 2012 ◽  
pp. 1-10 ◽  
Author(s):  
Luis C. Corchón ◽  
Félix Marcos
Keyword(s):  
Special Form ◽  
Demand Function ◽  
Returns To Scale ◽  
Consumer Surplus ◽  
Price Regulation ◽  
Marginal Costs ◽  
Oligopolistic Markets ◽  
Basic Parameters ◽  
Homogeneous Good ◽  
Constant Returns To Scale

We consider price regulation in oligopolistic markets when firms are quantity setters. We consider a market for a homogeneous good with a demand function of special form (-linearity), constant returns to scale, and identical firms. Marginal costs can take two values only: low or high. Values of all parameters except the marginal costs are known to the regulator. Assuming that the regulator is risk-neutral and maximizes expected social welfare (defined as the sum of consumer surplus and profits), we characterize the optimal policy and show how this policy depends on the basic parameters of demand and costs.

scholarly journals THE STANDARD VAT RATE AND THE EFFECTIVENESS OF FISCAL POLICY IN EUROPEAN UNION COUNTRIES

2021 ◽  
Vol 20 (1) ◽  
pp. 15-24
Author(s):  
Magdalena Jarczok-Guzy
Keyword(s):  
European Union ◽  
Statistical Analysis ◽  
The European Union ◽  
Consumption Tax ◽  
Member States ◽  
European Union Enlargement ◽  
Tax Revenues ◽  
European Union Countries ◽  
Consumption Taxes ◽  
The Impact

The purpose of this article is to present and assess the impact of a standard VAT rate on fiscal revenues of the European Union Member States. The article follows the method of economic statistical analysis and offers a review of available literature on the subject. The basic VAT rates of the European Union countries are presented, compared and correlated with tax revenues related to consumption taxes in the years 2005–2019. These years were chosen for analysis because of the biggest European Union enlargement which took place during 2004. A statistical analysis was conducted. The data of a correlation coefficient for each country and the dynamics indicators were calculated. The results of the statistical analysis for Member States were interpreted. The article assesses the relationship between the standard VAT rate and the share of consumption tax revenues in GDP.

scholarly journals AN ANALYSIS OF CONSUMPTION TAXES REGRESSIVE EFFECTS/АНАЛИЗА РЕГРЕСИВНИХ ЕФЕКАТА ПОРЕЗА НА ПОТРОШЊУ

TEME ◽  
2017 ◽  
pp. 1399
Author(s):  
Marina Đorđević ◽  
Dušan Perović
Keyword(s):  
Low Income ◽  
Tax Evasion ◽  
Value Added ◽  
Poverty Rate ◽  
Social Needs ◽  
Consumption Tax ◽  
Negative Effects ◽  
Tax Revenues ◽  
Financial Condition ◽  
Consumption Taxes

Indirect taxes such as value added tax (VAT), excises and duties have big significance for every country. With their assistance, countries can collect enough funds for financing everyday social needs. The share of consumption tax revenues in total tax revenues is high, because consumption taxes are applied to many products and services and they are resistant to tax evasion. Although they have many positive characteristics they are also very regressive. Low-income households give higher amount of money for basic foodstuff than high-income households. Every new increase of prices can make financial condition worse for poor households.The aim of paper is to point out on regressive side of consumption taxes. Also, some measures for reducing negative effects of consumption taxes will be presented. These measures can additionally help in reducing poverty rate, which is one of the biggest problems for many countries.

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