Behavioral and Distributional Effects of Environmental Policy (National Bureau of Economic Research Conference Report)

Most people would agree that it makes sense to tax a company that pollutes in a way that directly reflects the amount of environmental and social damage it has done. Yet in practice, such taxes are fraught with difficulty and have far-reaching implications. A company facing a new tax may lay off workers, for example, exacerbating an unemployment problem. This volume focuses on such external issues and examines in detail the trade-offs involved in designing policies to deal with environmental problems. Reflecting the broad nature of the subject, the contributors include leading economists in the areas of public finance, industrial organization, and trade theory, as well as environmental economists. Integrating both theoretical and empirical methods, they examine environmental policy design as it relates to location decisions, compliance costs, administrative costs, effects on research and development, and international factor movements. Shedding light on an extraordinarily complex and important topic, this collection will be of interest to all those involved in designing effective environmental policy. Most people would agree that it is sensible to tax companies guility of pollution, in a way that directly effects the amount of environmental and social damage they have inflicted. This volume examines the issues involved in designing policies to tackle environmental problems. A tax per unit of pollution can induce all the cheapest and most efficient forms of pollution abatement (Pigou 1932).