production lot sizing and carbon emissions under cap and trade and carbon tax regulations cap and trade and carbon tax are two emission regulations widely used to curb the carbon emissions generated from firms based on economic order quantity eoq model this paper examines the production lot sizing issues of a firm under these two regulations respectively the optimal lot size and emissions under the two regulations are achieved we then investigate the impacts of production and regulation parameters on the optimal lot size and emissions furthermore we compare the firm s optimal carbon emissions under the two regulations it is found that under the cap and trade regulation the firm s decisions of the optimal emissions as well as permits trading depend on the differentiated permits trading prices if setup incurs the same cost as holding incurs per unit of generated emissions both regulations always lead to the same optimal emissions which is also equal to that without emission regulation otherwise neither regulation always leads to lower emissions than the other does

determining the optimal carbon tax rate based on data envelopment analysis carbon tax policy is widely used to control greenhouse gases and how to determine a suitable carbon tax rate is very important for policy makers considering the trade off between environmental protection and economic development in an industry regulated by carbon tax policy we consider two competing firms who sell ordinary products and green products respectively in order to promote the firm who sells ordinary product to reduce carbon emissions the government of china imposes carbon tax on the ordinary products for the government three objectives are considered when it makes carbon tax policy they are increasing the government revenue reducing the government expenditure and decreasing the carbon emissions for the firms it is important to explore their pricing strategies taken into account of the government tax policy to find an optimal carbon tax rate and to achieve the three objectives simultaneously we consider this as a multiple criteria decision making problem hence we propose to use a centralized data envelopment analysis dea approach to solve it we find that when one firm produces ordinary products and the other produces green products the government may set a high tax rate while when both firms sell ordinary products the optimal tax policy for each firm is different and the government may impose a higher tax rate for one firm and a lower tax rate for the other firm

optimal production and carbon emission reduction level under cap and trade and low carbon subsidy policies abstract in recent years massive carbon emissions have caused serious global environmental damage such as a worsening greenhouse effect and thick haze to curb carbon emissions as well as maintain sustainable economic development governments promote the development of low carbon economy by issuing multiple policies among which the cap and trade policy ctp and low carbon subsidy policy lcsp are widely adopted moreover manufacturers are increasingly adopting carbon emission reduction technology to produce greener products considering related government policies and rising environmental awareness among consumers to give policy making insights to governments as well as production and carbon emission reduction decision making insights to manufacturers this paper investigates the impacts of ctp and lcsp on the production and carbon emission reduction level of a manufacturer and explores which policy is better for society the results show that the carbon emission reduction level increases as the carbon trading price increases whereas it is independent of the unit low carbon subsidy interestingly the carbon trading price does not always have a negative effect on the manufacturer s profit and the cap does not always produce a positive effect on the manufacturer s profit more importantly we find that lcsp is more beneficial to society when the environmental damage coefficient is less than a threshold but otherwise ctp is more beneficial

reassessment of the tiebout model abstract the tiebout model has been the reference point for the classical approach to fiscal federalism its emphasis on mobility benefit taxation and the advantages of fiscal competition have informed fiscal federalism since the seminal contributions of musgrave and oates this paper reviews the influence that the tiebout model has had on fiscal federalism and argues that while its insights remain relevant for local government it is far from compelling as a positive description of or a normative prescription for fiscal federalism at the state level some aspects of alternative approaches are presented which lead to different perspectives than tiebout inspired ones

nash equilibria in models of fiscal competition abstract this paper analyzes nash equilibria in a simple model of an economy with jurisdictions engaging in fiscal competition small number nash equilibria in which tax rates are the strategic variables are shown not to coincide with nash equilibria in which public expenditure levels are the strategic variables

designing economic instruments for the environment in a decentralized fiscal system designing economic instruments for the environment when external effects are important markets will be inefficient and economists have considered several broad classes of economic instruments to correct these inefficiencies however the standard economic analysis has tended to neglect important distinctions and interactions between the geographic scope of pollutants the enforcement authority of various levels of government and the fiscal responsibilities of the levels of government for example externalities generated in a particular local area may be confined to the local area or may spill over to other jurisdictions also local governments may be well informed about how best to regulate or enforce pollution control within their jurisdiction but they may not consider the effects of their actions on other jurisdictions finally the existence of locally generated waste emissions affects the appropriate assignment of both expenditure and tax responsibilities among levels of government the standard analysis therefore focuses mainly upon an aggregate or national perspective it typically ignores the possibility that the externality may be created and addressed by local governments and it does not consider the implications of decentralization for the design of economic instruments targeted at environmental problems this paper examines the implications of decentralization for the design of corrective policies that is how does one design economic instruments in a decentralized fiscal system in which externalities exist at the local level and in which subnational governments have the power to provide local public services as well as to choose tax instruments that can both finance these expenditures and correct the market failures of externalities

testing the taxmimicking versus expenditure spill over hypotheses using english data spatial interaction among local governments in tax setting and public spending decisions is receiving increasing attention in the applied public economics literature spatial interaction models rely on the presence of an externality from local budget making in traditional public finance models external effects originate either from interjurisdictional resource flows due to tax competition for a mobile base or from local public expenditure spill overs into neighbouring jurisdictions however the recent political agency yardstick competition literature has stressed the role of informational externalities between neighbouring jurisdictions and predicted tax mimicry at the local level the actual relevance of the above hypotheses clearly needs to be assessed empirically in this paper an attempt is made at discriminating between alternative sources of local fiscal interaction by using data on the english municipal authorities budgets while both public spending levels and local property tax rates ex

fiscal federalism and redistributive politics abstract we consider the interaction between redistributive politics at central and local levels in a federal system and characterize the factors influencing success in redistributive politics in both federal and unitary systems we examine how the political characteristics of different states and groups give them better or worse outcomes in a federal system as opposed to a unitary system we examine possibilities of multiple equilibria with divided government between the two layers we analyze the choice between block grants and matching grants we also examine the impact of federalism on the incentives for geographic mobility

optimizing an emission trading scheme for local governments a stackelberg game model and hybrid algorithm this study investigates a policy making problem for a local government to implement an emission trading scheme by considering the interactive production decisions of firms in its administrative region the market based allowance trading price formed freely among the firms in the region is investigated by taking into account regional environmental bearing capacities under the scheme the government sets the emission reduction target of the region and allocates tradable initial allowances to firms and firms plan their production according to their allowances on hand a stackelberg game model is formulated to analyze the decisions of the government and firms aiming to maximize the social welfare of the region and maximize the profit of each firm in view of the non concavity and discreteness of the decision model for the government we propose a hybrid algorithm to solve the game model efficiently this algorithm consists of a polynomial time dynamic programming binary search and genetic algorithm results reveal that i the stackelberg game model greatly supports local governments policy making on the market driven emission allowance trading scheme and that ii the social welfare is a great metric for policy making decisions on environmental regulations the market driven emission trading scheme is an effective mechanism for local governments to induce emission reduction through green technology adoption by firms however governments should set their emission reduction targets appropriately because a tight or easy regulation policy significantly affects the environmental and economic benefits as well as the social welfare

ex post redistribution in a federation implications for corrective policy abstract this paper analyzes whether changes in the timing of equalizing transfers to state governments necessitate an adjustment in federal corrective policy according to the existing literature assuming an ex ante choice of transfers the corrective grant is equal to the marginal damage benefit inflicted by externality generation when the federal government accommodates state finances ex post the grant differs in formula from existing prescription allocative federal policy corrects state policy incentives twofold it entails a correction for the distortion in the marginal benefit of state spending as in earlier literature and for the distortion in the marginal cost of public funds induced by the ex post provision of transfers the required grant rule is generically disproportionate to the equilibrium externality even with lump sum taxation furthermore the ex post provision of transfers is critical for the nature of the equilibrium inefficiency equalizing transfers at least partly internalize consumption spill overs but simultaneously establishes a new source of inefficiency as a final result the existing prescription for allocative federal policy continues to apply if the public good is pure

a comprehensive analysis of expenditure decentralization and of the composition of local public spending sacchi a and salotti s a comprehensive analysis of expenditure decentralization and of the composition of local public spending regional studies many industrialized countries have recently implemented fiscal decentralization reforms assigning more spending responsibility to sub national governments this paper investigates the causes of the decentralization of different categories of public expenditure in 19 developed countries over the period 1980 2006 different models for each of the spending functions under analysis are estimated adopting a general to specific empirical approach results confirm existing findings on the negative link between regional income disparities and expenditure decentralization a similarly negative relationship is found for a set of demographic variables leading to the conclusion that macroeconomic and more importantly political factors are responsible for the recent increase in decentralization finally the analysis is completed by a study of the factors driving sub n

a new assessment model of social cost of carbon and its situation analysis in china abstract the social cost of carbon scc represents monetary value of the damage caused by carbon dioxide emissions in climate change it is an important standard for the formulation of climate policy the uncertainty of carbon social cost is closely related to climate sensitivity damage parameters discount rate and so on previous studies have mainly focused on the consequences of climate change and the effect of social cost of carbon and welfare under different policies its research on the social cost of carbon has not included the evolution coefficient of carbon emissions and it has rarely introduced the climate disaster damage function into the process of solving the social cost of carbon this paper provides a simplified formula for the social cost of carbon the model has a nonlinear processing of the carbon circulation system which increases the nonlinear structure of co2 emission potential in addition the model modifies the climate damage function which adds additional losses from climate catastrophes this paper analyzes the combined effects of several key sensitivity parameters resulting in a fat tail distribution of social cost of carbon ultimately it is found that the mean scc of 2015 is 44 93 tco2 and the median scc is 15 9054 tco2 considering the possibility of extreme results and the impact of disaster risk loss on uncertain structure the joint effects of damage parameters climate sensitive parameters and discount rates make the social cost of carbon as much as 2 8 times the median and fat tail effect is obvious this brings uncertainty to the current emission reduction policies and abatement costs making it more difficult to assess cost effectiveness at last the paper evaluates the social cost of carbon under the base situation and low discount rate in china

comparisons of initial carbon allowance allocation rules in an o2o retail supply chain with the cap and trade regulation abstract this paper focuses on an o2o retail supply chain in the context of low carbon environment the decision models are constructed under three cases without cap and trade regulation cap and trade regulation based on grandfathering mechanism and cap and trade regulation based on benchmarking mechanism the emission reduction strategies of the supply chain members in the three cases are then discussed the paper compares the effects of the grandfathering and benchmarking mechanisms on the firm s decisions profits and social welfare firstly the results show that the unit carbon quota plays a decisive role in firm s decisions compared with the grandfathering methodology the benchmarking one can more effectively push manufacturers to produce low carbon products and motivate retailers to promote low carbon products secondly it is profitable for the retailer to cooperate with a manufacturer who has lower emission reduction cost simultaneously the retailer will prefer the benchmarking mechanism to the grandfathering mechanism thirdly for the government it is beneficial to use grandfathering mechanism for low carbon emission firms and use benchmarking mechanism for high carbon emission firms also the paper provides government and firms with conditions where the benchmarking allocation method is more suitable for sustainable development the government s decision on benchmarks is a critical factor in maximizing the social welfare

optimal taxation and intergovernmental transfer in a dynamic model with multiple levels of government abstract in this paper we study the optimal choices of the federal income tax federal transfers and local taxes in a dynamic model of capital accumulation and with explicit game structures among multiple private agents multiple local governments and the federal government in general the optimal local property tax is zero if the local property tax is constrained to be nonnegative whereas the optimal local consumption tax is always positive when the local consumption tax is chosen optimally the federal income tax can be either positive or negative for most reasonable parameter values our numerical calculations have shown that with a positive local consumption tax there exists a reverse transfer from local governments to the federal government

what do we know about carbon taxes an inquiry into their impacts on competitiveness and distribution of income abstract the kyoto protocol to the united nations framework convention on climate change unfccc has set legally binding emissions targets for a basket of six greenhouse gases and timetables for industrialised countries it has also incorporated three international flexibility mechanisms however the articles defining the flexibility mechanisms carry wording that their use must be supplemental to domestic actions this has led to the open debates on interpretations of these supplementarity provisions such debates ended at the resumed sixth conference of the parties cop to the unfccc held in bonn july 2001 and at the subsequent cop 7 in marrakesh november 2001 the final wording in the bonn agreement reaffirmed in the marrakesh accords at least indicates that domestic policies will have an important role to play in meeting annex b countries emissions commitments carbon taxes have long been advocated because of their cost effectiveness in achieving a given emissions reduction in this paper the main economic impacts of carbon taxes are assessed based on a review of empirical studies on existing carbon energy taxes it is concluded that competitive losses and distributive impacts are generally not significant and definitely less than often perceived however given the ultimate objective of the framework convention future carbon taxes could have higher rates than those already imposed and thus the resulting economic impacts could be more acute in this context it has been shown that how to use the generated fiscal revenues will be of fundamental importance in determining the final economic impacts of carbon taxes finally we briefly discuss carbon taxes in combination with other domestic and international instruments

an equilibrium voting model of federal standards with externalities this paper proposes a framework for studying policy making in a federal system in the presence of spillover externalities local jurisdictions choose local policies by majority rule subject to standards that are set by majority rule at the federal level we characterize the induced preferences of voters for federal policies prove existence of local majority rule equilibrium provide an example of non existence of global majority rule equilibrium and explore the welfare properties of federal standards in the presence of spillovers

the dual political economy of taxes and tradable permits abstract the widely accepted difference in the political economy of taxes and tradable permits results from overly simple models a more general model shows that the distributional impacts driving the political economy of grandfathered permits can be similar for both policies

the spatial effects of wage or property tax differentials and local government choice between tax instruments abstract this paper considers the spatial effects on wages employment and business capital as functions of location of a localized differential in source based wage tax rates or business property tax rates between for example a central city and the surrounding suburbs a simple model is used in which business production uses only labor and capital inputs consumers have fixed residential locations but may commute to work wage and property tax differentials have effects that are similar in some ways but different in other ways if given a choice a local government would choose to set its business property tax rate equal to zero and use only a wage tax

joint production and pricing decisions for multiple products with cap and trade and carbon tax regulations abstract cap and trade and carbon tax regulations are the two main low carbon policies to curb carbon emissions this paper studies the joint production and pricing problem of a manufacturing firm with multiple products under cap and trade and carbon tax regulations and compares the effects of the two regulations on the total carbon emissions the firm s profit and social welfare the firm faces price sensitive demands and the demands for these products are independent firstly we find that the optimal number of products to be produced under cap and trade regulation carbon tax regulation is determined by the emission trading prices and the cap tax rate secondly we detect that the optimal cap tax rate is decreasing increasing or constant in the environmental damage coefficient finally we discover that the social welfare under carbon tax regulation is not less than that under cap and trade regulation although there is neither one regulation always inducing more profit and having advantages in curbing carbon emissions than the other one

inflationary bias and state owned financial institutions this article explains why the existence of state owned financial institutions makes it more difficult for a country to balance its budget we show that states can use their financial institutions to transfer their deficits to the federal government as a result there is a bias towards large deficits and high inflation rates our model also predicts that state owned financial institutions should underperform the market mainly because they concentrate their portfolios on non performing loans to their own shareholders that is the states brazil and argentina are two countries with a history of high inflation that confirm our predictions

optimal strategies for capital constrained low carbon supply chains under yield uncertainty abstract we investigate the optimal strategies for a capital constrained low carbon supply chain with uncertain yield with the features of green finance and carbon cap and trade scheme the results indicate that the green finance subsidy and the low carbon subsidy have positive impacts on the carbon emission reduction but the yield uncertainty has negative impacts for manufacturers with low initial emission level the green finance subsidy is more efficient than the low carbon subsidy however for manufacturers with high initial emission level the low carbon subsidy is more effective than the green finance subsidy further analysis indicates that green finance can increase the positive effects of the carbon cap and trade scheme on manufacturers with medium or low emission levels but the yield uncertainty can decrease the positive effects for high emission manufacturers with green finance the cap and trade can have more negative effects on the investment in carbon emission reduction and with the yield uncertainty the cap and trade can have less negative effects on the manufacturers carbon emission reduction

government size government debt and globalization this article empirically investigates the effect of globalization on government size and debt using panel heterogeneous cointegration techniques to a panel of developing and developed countries i

spillover effects in local public spending abstractthis paper investigated the fiscal interactions between italian municipalities over the period 2001 11 and found a positive horizontal interdependence in spending decisions the results are robust to different specifications of the spatial neighbours and are confirmed by a natural experiment an earthquake in the abruzzo region of italy in 2009 that creates an exogenous variation in the neighbours spending furthermore there is no evidence of yardstick competition when one considers political effects while a negative relationship is found between spatial interaction and the size of the municipality thus it can be concluded that spillover effects drive the strategic interactions in spending decisions

competitive tax theory in open economies constrained inefficiency and a pigovian remedy abstract in an economy with multiple governments each is constrained to raise revenue for public expenditures using distortionary taxes on a directly mobile tax base a government is said to be competitive if the total cost of its decisions including the excess burden is perceived to be internalized the competitive equilibrium allocations are not constrained efficient in general there is another set of distortionary taxes and associated public expenditures for which all individuals in the economy are better off it is shown that the source of the failure can be interpreted as a missing market and the form of the best decentralized remedy is derived

environmental policy in a green market this paper studies the impact of some frequently used environmental policies in a duopolistic market where purchasers are willing to pay more for less polluting goods when consumers differ in their environmental awareness a cleaner and a dirtier variant coexist in equilibrium the higher the average willingness to pay for the good the lower are variants unit emissions but the higher are industrial aggregate effluents a maximum unit emission standard reduces unit emissions of both variants but boosts firms sales and consequently increases industrial aggregate emissions as a result social welfare may be reduced we also explore the effects of technological subsidies and product charges including differentiation of charges

white and green comparison of market based instruments to promote energy efficiency the white and green project completed under the eu save programme reviewed policies and measures to promote energy efficiency which involved analysing the experience with instruments that are already implemented and assessing innovative instruments that are proposed in particular the practicability of using white certificates energy efficiency along the same lines as green certificates renewable energy was explored several of the policies and measures were simulated using technical economic model of the markal family the results show that by 2020 it is possible to increase energy effiency by 15 at no cost without taking externalities into account if externalities are considered an increase of 30 35 with respect to the business as usual scenario is justified the wealth of information obtained through the models and analysis provides a set of recommendations for policy makers including 1 the need for closer co ordination between energy policies and environmental and climate policies 2 the opportunity to establish more ambitious targets for energy efficiency 3 the scope for increased eu co ordination 4 the extension of white certificates to the medium and low energy intensive industries 5 the need to support white certificates with accompanying actions such as running information campaigns promoting energy service companies and providing dedicated credit lines 6 the need to develop similar instruments for transport and 7 the continuing need for energy research and development c 2005 published by elsevier ltd

design of sustainable supply chains under the emission trading scheme increase in environmental concerns together with legislations are forcing industries to take a fresh look at the impact of their supply chain operations on the environment this paper introduces a mixed integer linear programming based framework for sustainable supply chain design that considers life cycle assessment lca principles in addition to the traditional material balance constraints at each node in the supply chain indeed the framework distinguishes between solid and liquid wastes as well as gaseous emissions due to various production processes and transportation systems the framework is used to evaluate the tradeoffs between economic and environmental objectives under various cost and operating strategies in the aluminum industry the results suggest that current legislation and emission trading schemes ets must be strengthened and harmonized at the global level in order to drive a meaningful environmental strategy moreover the model demonstrates that efficient carbon management strategies will help decision makers to achieve sustainability objectives in a cost effective manner

a volatility based theory of fiscal union desirability abstract heterogeneous countries may rationally choose to form a currency union first and a fiscal union later we find and illustrate empirically for the emu countries reasonable volatility conditions under which this sequencing in the deepening process is indeed rationalizable changes in the distribution of expected income shocks require a reassignment of political weights to restore unanimous support for an added fiscal dimension the bargaining space depends on countries relative income size and cross correlation of shocks

budget spillovers and fiscal policy interdependence evidence from the states abstract this paper formalizes and tests the notion that states expenditures depend on the spending of similarly situated states we find that even after allowing for fixed state effects year effects and common random shocks among neighbors a state government s level of per capita expenditure is positively and significantly affected by the expenditure levels of its neighbors ceteris paribus a one dollar increase in a state s neighbors expenditures increases its own expenditure by over 70 cents

the consequences of overlapping tax bases for redistribution and public spending in a federation tax and expenditure policies are studied in a federation with imperfectly mobile households states implement a linear progressive tax and supply a public good a vertical fiscal externality reflecting the effect of state policies on federal revenues provides an incentive for state taxes to be too progressive a horizontal fiscal externality causes nonoptimal state taxes and expenditures because of the migration effect the federal government implements its own linear progressive tax and makes transfers to the states the federal government can nullify both externalities by appropriate fiscal policies and redistributive taxation can be decentralized to the states c 1998 elsevier science s a

optimal production planning with emissions trading emissions trading is a market based mechanism for curbing emissions and it has been implemented in europe north america and several other parts of the world to study its impact on production planning we develop a dynamic production model where a manufacturer produces a single product to satisfy random market demands the manufacturer has access to both a green and a regular production technology of which the former is more costly but yields fewer emissions to comply with the emissions regulations the manufacturer can buy or sell the allowances in each period via forward contracts in an outside market with stochastic trading prices while needing to keep a nonnegative allowance account balance at the end of the planning horizon we first derive several important structural properties of the model and based upon them we characterize the optimal emissions trading and production policies that minimize the manufacturer s expected total discounted cost in particular the optimal emissions trading pol

does federalism lead to excessively high taxes the relative strengths of vertical and horizontal tax externalities turn on the balance between the interest responsiveness of the supply of savings and demand for capital the extent to which immobile factors are taxed by the states and the strength of preferences between federal and state expenditures the vertical externality will dominate if the aggregate tax base of the federation is responsible to the state tax instrument tax interactions in federations are more complex than has often been supposed

time dependent correlations in electricity markets in the last years many electricity markets were subjected to deregulated operation where prices are set by the action of market participants in this form producers and consumers rely on demand and price forecasts to decide their bidding strategies allocate assets negotiate bilateral contracts hedge risks and plan facility investments a basic feature of efficient market hypothesis is the absence of correlations between price increments over any time scale leading to random walk type behavior of prices so arbitrage is not possible however recent studies have suggested that this is not the case and correlations are present in the behavior of diverse electricity markets in this paper a temporal quantification of electricity market correlations is made by means of detrended fluctuation and allan analyses the approach is applied to two canadian electricity markets ontario and alberta the results show the existence of correlations in both demand and prices exhibiting complex time dependent behavior with lower correlations in winter while higher in summer relatively steady annual cycles in demand but unstable cycles in prices are detected on the other hand the more significant nonlinear effects measured in terms of a multifractality index are found for winter months while the converse behavior is displayed during the summer period in terms of forecasting models our results suggest that nonlinear recursive models e g feedback nns should be used for accurate day ahead price estimation in contrast linear models can suffice for demand forecasting purposes

in a world without borders the impact of taxes on internet commerce the rapid rise in sales over the internet and the fact that most internet buyers pay no sales tax has ignited a considerable debate over taxes and the internet this paper uses new data on the purchase decisions of approximately 25 000 online users to examine the effect of local sales taxes on internet commerce the results suggest that controlling for observable characteristics people living in high sales taxes locations are significantly more likely to buy online the results are quite robust and cannot be explained by unobserved technological sophistication shopping costs or other alternative explanations the magnitudes in the paper suggest that applying existing sales taxes to internet commerce might reduce the number of online buyers by up to 24 percent

fiscal decentralization and spillover effects of local government public spending the case of italy abstractfiscal decentralization and spillover effects of local government public spending the case of italy regional studies this paper investigates the presence of spatial interdependencies in the regional public expenditure decision process and the impact of fiscal decentralization on its determinants the analysis refers to the constitutional reform concluded in italy in 2001 that redefined the legislative powers of the regions and their sectoral competence the results highlight the opportunistic behaviour of regional governments in sectors where they can benefit from neighbours public expenditure spillovers other findings comprise the presence of congestion and mobility effects a shift in demand to the private sector except for education and the mobility of individuals towards richer regions

on pareto improving commodity tax changes under fiscal competition this paper shows that when a noncooperative fiscal equilibrium of the mintz tulkens 1986 model of tax competition is inefficient pareto improving changes are positive for the taxes of both regions under concavity of the regions welfare functions it also identifies a class of such equilibria that are always efficient

the impacts of liquidity dynamics on emissions allowances price different evidence from china s emissions trading pilots abstract the liquidities of china s emissions trading markets have significant impacts on emissions allowances price movement and pricing efficiency liquidity measures on illiquidity ratio and trade values indicate hubei emissions allowances hbea product has the highest liquidity shenzhen allowances sza and guangdong emissions allowances gdea products have the higher liquidity than beijing emissions allowances bea and shanghai emissions allowances shea products while tianjin emissions allowances tjea product has the lowest market liquidity in considered china s emissions trading pilots the dynamics of the illiquidity ratios for all selected emissions allowances products are negatively related with emissions allowances returns and trade volumes for bea tjea sza and hbea products are also negatively related with emissions allowances returns the dynamics of daily illiquidity ratios and trade based liquidity in beijing tianjin guangdong shenzhen hubei emissions pilots have significant volatility clustering impacts on the variances of regional emissions allowances returns previous market shocks of overnight and intraday price variations have the more persistent influences on the gdea returns than hbea returns reflecting greater inter day price ranges clustering effect

do local governments use their tax bases efficiently abstract this paper analyzes an economy with multiple governments and with mobility of individuals across jurisdictions where each government is constrained to raise revenue for public expenditures using distortionary taxes a government is said to be competitive if the total benefits and costs of its decisions including the excess burden are perceived to be internalized the competitive equilibrium allocations are not constrained efficient in general there exists another set of distortionary taxes and public expenditures such that when private sector behavior adjusts to maintain equilibrium all individuals in the economy are better off thus competitive decentralized decision making does not lead to an efficient use of the available tax instruments it is also shown that the source of the failure can be interpreted as a missing market and the form of the best decentralized remedy which involves pricing the tax base is derived

combining price and quantity controls to mitigate global climate change abstract uncertainty about compliance costs causes otherwise equivalent price and quantity controls to behave differently and leads to divergent welfare consequences although most of the debate on global climate change policy has focused on quantity controls due to their political appeal this paper argues that price controls are more efficient simulations based on a stochastic computable general equilibrium model indicate that the expected welfare gain from the optimal price policy is five times higher than the expected gain from the optimal quantity policy an alternative hybrid policy combines both the political appeal of quantity controls with the efficiency of prices using an initial distribution of tradeable permits to set a quantitative target but allowing additional permits to be purchased at a fixed trigger price even sub optimal hybrid policies offer dramatic efficiency improvements over otherwise standard quantity controls for example a 50 trigger price per ton of carbon converts the 3 trillion expected loss associated with a simple 1990 emission target to a 150 billion gain these results suggest that a hybrid policy is an attractive alternative to either a pure price or quantity system

allowance price drivers in the first phase of the eu ets abstract in the first phase of the eu emissions trading scheme eu ets the price per ton of co 2 initially rose to over 30 the price then collapsed to essentially zero by mid 2007 by deriving a structural model of the allowance price under the assumption of efficient markets i examine the extent to which this variation in price can be explained by marginal abatement costs i then gradually relax the model by allowing for delayed adjustment of price to fundamentals as well as by introducing lagged lhs variables the pattern of results suggests that while prices were not initially driven by marginal abatement costs this inefficiency was largely corrected after the accounting of 2005 emissions in april 2006

a positive model of overlapping income taxation in a federation of states abstract this paper develops a positive theory of overlapping income taxation in a federation of states the analysis provides a complete characterization of the equilibrium federal and states tax rates as functions of the level of total productivity dispersion between the states the federal rate is increasing in the level of total productivity dispersion between the states even if the income of the decisive voter at the federal level is above the mean income given that the individuals income is endogenously determined there exists a negative trade off between the implemented federal tax rate and the resulting states tax rates regardless of the pre tax income of the decisive voter at the state level thus high levels of productivity dispersion between the states cause a higher than optimal federal tax rate together with low states tax rates it is also shown that a system of overlapping income taxation is not efficient the resulting inefficiency might be exacerbated by the implementation of a federal matching grants program contradicting previous results in the related normative literature

coordination in heterogeneous federal systems abstract we compare centralized and decentralized policy making in a federation in which policy heterogeneity is inherently costly and preferences vary across jurisdictions all jurisdictions agree that some harmonization is desirable but no one agrees on the direction of harmonization this type of collective choice problem arises when members of a federal system have to coordinate nonbudgetary policies such as laws regulations standards or diplomatic policies contrary to the common wisdom decentralization becomes optimal when coordination becomes very important when coordination costs are symmetric decentralization dominates centralization irrespective of the magnitude of externalities and the heterogeneity of preferences in the case of discontinuous network effects standardization never pareto dominates decentralization

the deductibility of provincial business taxes in a federation with vertical fiscal externalities should provincial business taxes be deductible under a federal profit tax we show that the optimal deductible which neutralizes the vertical fiscal externality between the federal and provincial government is the change in the federal tax base per dollar of tax revenue collected by the provincial government the optimal payroll tax deductibility rate depends on the extent to which it is shifted to workers and on the difference between the federal tax rates on profits and on labour income two apparently contradictory positions full deductibility of a payroll tax and non deductibility are special cases of our model la deductibilite des taxes provinciales imposees aux entreprises dans une federation ou il y a des externalites fiscales verticales est ce que les taxes provinciales imposees aux entreprises devraient etre deductibles de l impot federal sur les profits les auteurs montrent que l optimum de deductibilite qui neutralise les externalites fiscales verticales entre le federal et les provinces est le changement dans la base d imposition federale par dollar de revenu fiscal collecte par le gouvernement provincial le taux de deductibilite optimal d un impot sur les salaires depend de la portion du fardeau fiscal qui est deportee vers les travailleurs et de la difference entre les taux d imposition du federal sur les profits et sur le revenu du travail deux positions apparemment contradictoires pleine deductibilite d un impot sur les salaires et deductibilite nulle sont des cas speciaux du modele general

managing carbon footprints in inventory management abstract there is a broad consensus that mankind must reduce carbon emissions to mitigate global warming it is generally accepted that carbon emission trading is one of the most effective market based mechanisms to curb the amount of carbon emissions this paper investigates how firms manage carbon footprints in inventory management under the carbon emission trading mechanism we derive the optimal order quantity and analytically and numerically examine the impacts of carbon trade carbon price and carbon cap on order decisions carbon emissions and total cost we make interesting observations from the numerical examples and provide managerial insights from the analytical results

federalism and the soft budget constraint the government s incentives to bail out inefficient projects are determined by the trade off between political benefits and economic costs the latter depending on the decentralization of government two effects of federalism are derived first fiscal competition among local governments under factor mobility increases the opportunity costs of bailout and thus serves as a commitment device the competition effect second monetary centralization together with fiscal decentralization induces a conflict of interests and thus may harden budget constraints and reduce inflation the checks and balance effect the authors analysis is used to interpret china s recent experience of transition to a market economy copyright 1998 by american economic association

economic risk and political risk in fiscal unions a fiscal programme that redistributes income from rich to poor individuals indirectly redistributes tax revenues from regions hit by a favou rable shock to regions hit by an unfavourable one centralised fiscal redistribution has therefore been advocated as a way to insure individuals against region specific shocks in this paper we argue that a centralised fiscal policy while reducing the uncertainty on the tax base may create additional uncertainty on the tax rate using a simple model we show that the higher uncertainty on the policy instrument might more than offset the lower uncertainty on the tax base several countries around the world are breaking up e g the former soviet union and in others regional movements are becoming more vocal in demanding more autonomy e g italy spain at the same time several western european countries are integrating in a supernational community fiscal policy issues and in particular the level of centralisation of fiscal decisions are important considerations in the formation or collapse of political jurisdictions or of federations of regions and countries 1 a long tradition in public finance argues that a centralised fiscal system can reach more efficient outcomes by better internalising the numerous externalities associated with both the expenditure and the revenue sides of fiscal policy particularly when factors are mobile this line of argument applies to both the provision of public goods gordon 1983 and to redistributive fiscal policy pauli 1973 ladd and doolittle 1982 brown and oates 1987 a counter argument to this conclusion is developed in perotti 1997 who shows that in the presence of differences in say labour markets or the administration of fiscal policy centralised redistribution can lead to a more inefficient allocation of resources a second argument in favour of centralised fiscal policy is based on the insurance properties of redistribution when different countries are hit by

income taxes sorting and the costs of housing evidence from municipal boundaries in switzerland this paper provides novel evidence on the role of income taxes for residential rents and spatial sorting drawing on comprehensive apartment level data we identify the effects of tax differentials across municipal boundaries in switzerland the boundary discontinuity design bdd corrects for unobservable location characteristics such as environmental amenities or the access to public goods and thereby reduces the estimated response of housing prices by one half compared to conventional estimates we identify an income tax elasticity of rents of about 0 26 we complement this approach with census data on local sociodemographic characteristics and show that about one third of this effect can be traced back to a sorting of high income households into low tax municipalities these findings are robust to a matching approach mbdd which compares identical residences on opposite sides of the boundary and a number of further sensitivity checks

commodity tax competition between member states of a federation equilibrium and efficiency we first describe regional market equilibria whereupon consumers of each region allocate their purchases of private goods between domestic and nondomestic ones according to the structure of relative prices taxes and transportation costs next regional optimal tax levels and public good quantities are derived the tax of the other region being held constant fiscal competition arises from the ability of one region in choosing its tax to alter the tax base of the other

the newsstand problem a capacitated multiple product single period inventory problem abstract practically all of the many earlier papers on the newsboy problem consider a single newsboy product with no capacity constraint this paper presents formulations and solution procedures for handling multiple newsboy type products under two cases a one resource capacity constraint and b multiple resource constraints for case a we present a necessary extension to the classical hadley whitin result for handling general demand distributions for case b we present a solution procedure that can efficiently handle the common situation where a very large number of products are involved

sustainable infrastructure investment with labor only production abstract the purpose of this paper is to consider a partial equilibrium model for a sustainable infrastructure investment in a labor production economy we consider an inter temporal stackelberg game in a capital primitive economy where all capital investments are made by a central agency a government the government is assumed to have a number of objectives including sustainability of the infrastructure investments while firms are assumed to be myopic maximizing only current profits and paying taxes as a function of their returns both open loop and closed loop feedback stackelberg strategies are considered based on the analysis of the investment game some conclusions are drawn regarding the propensity to invest as a function of sustainability constraints the taxation rates and employment levels we then show that investments can tend to a constant level and thus strategic government goals of sustainability and employment growth can be planned only if labor costs and the general price index are steady or characterized by a set of conditions ensuring the attainability of the steady state investment

tax rights in transition economies a tragedy of the commons abstract this paper develops the concept of tax rights to analyze the impact of fiscal institutions on economic development in transition economies a government s tax rights are poorly defined when it and other governments and agencies can unilaterally levy taxes on the same tax base existing evidence suggests that chinese local governments have gained more clearly defined tax rights than their russian counterparts using the big push model of industrialization murphy k shleifer a vishny r 1989 industrialization and the big push journal of political economy 95 1003 1026 within a common property resource framework we show that this difference in tax rights helps explain why china has been significantly more successful than russia

nimby taxes matter the case of state hazardous waste disposal taxes this paper links the theoretical and empirical literatures on interjurisdictional tax and regulatory competition focusing on the case of state hazardous waste disposal taxes it begins by demonstrating that local environmental taxes can be inefficient and that the inefficiency depends on the tax elasticity of polluters responses the paper then uses panel data from the toxics release inventory to estimate the magnitude of the tax elasticities and to demonstrate the empirical relevance of the theoretical inefficiency of local taxes 1999 elsevier science s a all rights reserved

designing tax policy in federalist economies an overview abstract the emerging economic federations of the european union russia and south africa along with the established federations in australia canada and the united states confront the task of designing the institutions for federal fiscal policy this paper reviews the literature on the design of tax policy in federalist economies we conclude that taxation by lower level governments can lead to significant economic inefficiencies and inequities the usual assignment view of federalis recommends central government policies for example resident based taxation or grants in aid to correct these failures these recommendations assume that the central government will act as a benevolent social planner the political economy view of federalism suggests that this assumption is in error and that additional federalist institutions must be considered alternative legislative structures and constitutional rules are considered

majority choice of tax systems in single and multi jurisdictional economies abstract we examine majority choice of tax instruments in an economy with heterogeneous households in our framework majority voting equilibrium exists despite the multidimensional policy choice set we examine single and multi jurisdictional economies we identify five competing incentives that influence choice of tax instruments equilibria generally entail a mixture of tax types with multiple jurisdictions strong reliance on head taxation in rich communities arises to deter poorer households from immigrating in spite of local incentives to use alternative tax instruments to redistribute wealth if relocation costs preclude inter community mobility the equilibrium tax system is fundamentally affected with redistribution incentives then dominating choice of instruments and tax rates limiting or eliminating head taxation fundamentally alters stratification public good provision levels and tax systems

supply chain coordination with green technology under cap and trade regulation abstract cap and trade regulation is generally accepted as one of the most effective market based mechanisms to curb carbon emissions in this paper we study the production and emission abatement decisions of a make to order supply chain consisting of a manufacturer and a retailer under cap and trade regulation specifically the manufacturer can reduce unit product carbon emission by using green technology with the cooperation of a retailer by certain contracts who sell the products to environment concerned consumers wholesale price and cost sharing contracts are considered in the supply chain we list some main conclusions here first as carbon trading price increases the optimal production quantities the optimal abatement levels firstly decrease increase and then remain constant second both wholesale price and cost sharing contracts can coordinate the supply chain last combining the optimal operational decisions under the two contracts with two part tariff agreement we design a contract in which the retailer pays a lump fee to the manufacturer and find that there is an interval of the lump fee to achieve pareto improvement for the two firms

the optimal property tax with mobile nonresidential capital abstract implications of the dynamic nature of mobile nonresidential capital for community fiscal behavior are examined using the median voter framework the representative voter s control rule calls for the community to lower its current public service demand in order to retain or attract taxable capital the model predicts a positive short run and a negative long run income effect on public good demand incorporating intergovernmental aid into the model asymmetry between effects of the unconditional aid and of the voter income is demonstrated

fiscal capacity tax effort and optimal equalization grants in this paper we address the question how should the tax burden in a feder ation be distributed across the different jurisdictions so that the social cost of providing government services is minimized using optimal tax theory we derive formulas for the optimal equalization grants that equalize the social marginal cost of raising revenue across all provinces we show how the optimal equalization grants are related to a measure of tax effort based on the marginal cost of public funds and a measure of fiscal capacity that takes into account the elasticity of the tax base and its substitutability with other tax bases

a three input model of the spatial effects of a central city wage tax abstract this paper considers the short run and long run spatial effects on wages employment and business capital as functions of location of a localized increase in wage tax rates the model is most applicable to a central city that has a higher wage tax rate than the surrounding suburbs the inclusion of land as a third input in production significantly reduces the long run effects of a central city wage tax on employment near the central city boundary as compared with a model in which labor and capital are the only two inputs the short run effects are significantly less than the long run effects

when is two better than one how federalism mitigates and intensifies imperfect political competition the current paper models power maximizing politicians behavior subject to imperfect political competition and perfect citizen mobility it then analyzes the welfare implications of federal and non federal structures the model abstracts from both heterogeneous preferences the most common argument in favor of federalism and externalities the most common argument against showing that even in this simplified setting federalism has important welfare implications there is one class of equilibria in which more federalism has the purely beneficial effect of offsetting imperfections in the political process however there is also a second class of equilibria in which citizen mobility makes political imperfections more severe by creating safe districts for both political parties 2001 elsevier science b v all rights reserved

openness government size and the terms of trade this paper investigates the relationship between trade openness and the size ofngovernments both theoretically and empirically we argue that openness can increase the size of governments through two channels 1 a terms of trade externality whereby trade lowers the domestic cost of taxation and 2 the demand for insurance whereby trade raises risk and public transfers we provide a unified framework for studying and testing these two mechanisms our main theoretical prediction is that the relative strength of the two explanations depends on a key parameter namely the elasticity of substitution between domestic and foreign goods moreover while the first mechanism is inefficient from the standpoint of world welfare the second is instead optimal in the empirical part of the paper we provide new evidence on the positive association between openness and government size and we explore its determinants consistently with the terms of trade externality channel we show that the correlation is contingent on a low elasticity of substitution between domestic and foreign goods our findings raise warnings that globalization may have led to inefficiently large governments

strategic aspects of public finance in a world with high capital mobility abstract in a world with high capital mobility an increase in equity taxes is likely to induce a capital out flow it is commonly believed that in consequence there may be an under provision of public goods when governments have only equity taxes at their disposal this paper compares the provision of public goods under cooperative and non cooperative tax policies suprisingly the non cooperative regime may result in either an over or an under provision of public goods it is also shown that the gains from coordination increase as countries become atomistic

an analysis of company choice preference to carbon tax policy in china abstract this paper summarizes an analysis of choice preferences of chinese companies to the design options of carbon tax policy the data were collected from 201 companies with around half of them based in the western shanxi province and the other half from the eastern jiangsu province modeling analysis of the discrete choice dataset confirms the statistically significant relationships between the company s preferences to carbon tax policy with the policy attributes including tax rate tax relief measures and the revenue utilization from the viewpoint of chinese businesses the option of carbon tax policy with tax rate at 10 30 yuan t co 2 allowing tax relief to energy intensive sectors using the revenues specific for climate change and starting as early as the 13th five year plan period 2016 2020 would be preferable and realistic the results of this research may be referred for the discussions and development of carbon tax policy in china

an optimal taxation approach to fiscal federalism in a federal system of government each unit of government decides independently how much of each type of public good to provide and what types of taxes and which tax rates to use in funding the public goods in this paper we explore what types of problems can arise from this decentralized form of decision making in particular we describe systematically the types of externalities that one unit of government can create for nonresidents through both its public goods decisions and its taxation decisions the paper also explores briefly what the central government might do to lessen the costs of decentralized decision making

tax decentralization and local government size this paper investigates the relationship between fiscal federalism and the sizes of local governments while many empirical studies emphasized that grants encourage the growth of local public spending and local taxes constrain it they are more silent regarding the effects of different types of tax autonomy the paper addresses this issue by arguing that tax decentralization as organized on tax bases used only by local governments tax separation rather than on tax base sharing would restrain local public expenditures using an unbalanced panel of oecd countries the key finding is that only property taxes mostly based on a tax separation scheme seem to favor smaller local governments thus while tax decentralization is a necessary condition for limiting the growth of local governments it does not appear sufficient as tax separation schemes among government levels would in fact be required

the welfare effects of intergovernmental grants in an economy with distortionary local taxes a simple general equilibrium analysis this paper examines the welfare impact of intergovernmental transfers when recipient governments use distortionary taxes both lump sum and matching grants are investigated a distortionary factor depending on local demand and supply elasticities and the local tax rate on the taxed commodity determines the real income change to a jurisdiction per dollar transferred matching grants are dominated by lump sum grants when these can be set optimally for each recipient if grant policy must be uniform positive or negative matching rates are desired if equity adjusted distortionary factors are positively negatively correlated with local public service levels

tax subsidy policies in the presence of environmentally aware consumers abstract we study policy measures to improve environmental quality in the presence of environmentally aware consumers we consider two sets of policy instruments uniform policies for the firms and policies that discriminate between the firms based on their environmental quality for the latter set either the better performer is rewarded with a subsidy or the worse performer is punished with a tax we find that while a uniform subsidy policy improves average environmental quality a uniform tax policy worsens it further while a discriminatory subsidy policy reduces total pollution and enhances aggregate welfare a discriminatory tax policy may increase total pollution and may reduce aggregate welfare

multi item production planning with carbon cap and trade mechanism abstract carbon emission control becomes a challenge in recent years and carbon emission trading is an effective way to curb carbon emission this paper investigates the multi item production planning problem with carbon cap and trade mechanism in which a firm uses a common capacity and carbon emission quota to produce multiple products for fulfilling independent stochastic demands and the firm can buy or sell the right to emit carbon on a trading market of carbon emission a profit maximization model is proposed to characterize the optimization problem the optimal policy of production and carbon trading decisions is analyzed and an efficient solution method with linear computational complexity is presented for solving the optimal solution the impacts of carbon price carbon cap on the shadow price of the common capacity production decisions carbon emission and the total profit are investigated the comparisons of the carbon cap and trade policy and the taxation policy are given to show the effectiveness of the policies numerical analyses are presented for illustrating our findings and obtaining some managerial insights and policy implication

tax competition tax exporting and higher government choice of tax instruments for local governments abstract this paper presents a theoretical model with tax exporting due to external ownership of a fraction of the land in each local jurisdiction there are n local jurisdictions in a metropolitan area n 1 and many metropolitan areas in a world economy the paper examines the usage of business property taxes and source based wage taxes by local jurisdictions first in the presence of and then in the absence of residence based lump sum taxes and how this depends on and n the paper then examines the choice of a world national or state government as to whether to allow local metropolitan or sub metropolitan governments to use business property taxes wage taxes or both assuming that the local governments choose the actual tax rates

the impact of carbon policies on supply chain design and logistics of a major retailer abstract the energy used to move freight comprised about 17 of all the energy consumed in the united states in 2010 this percentage was an increase from 8 7 in 1970 even though fuel efficiency gradually improved over the period one major reason of this phenomenon is that the longer supply chains of many industries caused by globalization increase freight movement various carbon policies have been discussed and even implemented for some industry sectors in the european union to reduce carbon emissions however the emissions of surface transportation have not been well studied this paper investigates three of the most common carbon policies carbon emission tax inflexible cap and cap and trade the impact on a company may include the redesign of its supply chains and different choices of transportation modes truck rail or waterway this paper proposes optimization models for major retailers who make a huge contribution to freight movement to design their supply chains under various carbon policies the results from the models can help policy makers to predict the impact of policies on overall emissions in the freight transportation sector the model may also be incorporated into the integrated assessment models for climate change analyses furthermore a sensitivity analysis is conducted to study the impact of the policy parameters on carbon emissions and logistics cost this research uses the supply chain of a major u s retailer i e wal mart to demonstrate how to use the models and conduct the sensitivity analysis in order to realize significant emission reduction a redesign of supply chains of major retailers is necessary and will be triggered only by a high carbon tax rate a high carbon price or a very strict carbon cap which all may involve high social and or economic complexity numerical experiments show that different policies have different impacts on the costs and the effectiveness of emission reduction how to choose policy parameters is critical to the effectiveness of a carbon policy the different sensitivity also implies different challenges during the implementation of the policies such as the high cost preventing retailers from accepting any carbon taxes and the difficulty of reaching an agreement on the carbon caps between retailers and policy makers

the impact of corporate and personal income taxes on the location of firms and on employment some panel evidence for the swiss cantons abstract the impact of corporate income taxes on location decisions of firms is widely debated in the tax competition literature tax rate differences across jurisdictions may lead to distortions of firms investment decisions empirical evidence on tax induced relocation and subsequent economic development in the us and europe is still inconclusive much the same applies to switzerland while there is some evidence on personal income tax competition between swiss cantons evidence on the impact of intercantonal corporate income tax differences on the location of business within switzerland is missing in this paper we present econometric evidence on the influence of corporate and personal income taxes on the regional distribution of firms in 1981 and 1991 and on cantonal employment using a panel data set of the 26 swiss cantons from 1985 to 1997 the results show that corporate and personal income taxes deter firms to locate in a canton and subsequently reduce cantonal employment

economics of devolution decentralization in the uk some questions and answers mcgregor p g and swales k 2005 economics of devolution decentralization in the uk some questions and answers regional studies 39 477 494 the paper explores the economic implications of the radical process of devolution decentralization and delegation of decision making and policy delivery initiated by the post 1997 uk labour government it is argued that the economies of all the presently devolved regions ultimately suffer if the barnett formula is rigorously imposed it is shown that the efficiency of devolving fiscal authority involves a balance of positive and negative elements depending on wage bargaining and migration responses it is then argued that delegation devolution of regional economic development policies while exploiting regional information advantages neglects regional economic interdependence so there are potential gains from greater cooperation coordination