Empirical estimates for environmental policy making in a second-best setting
By: Sarah E. West, Roberton C. Williams.
Contributors: Williams, Roberton C., 1972-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10330; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10330.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This study estimates parameters necessary to calculate the optimal second-best gasoline tax, most notably the cross-price elasticity between gasoline and leisure.  Prior work indicates that in a second-best setting with distortionary income taxes, both the cost of environmental regulation and the optimal environmental tax rate depend crucially on the cross-price elasticity between a polluting good and leisure.  However, no prior study on second-best environmental regulation has estimated this elasticity.  Using household data, we find that gasoline is a relative complement to leisure, and thus that the optimal gasoline tax is significantly higher than marginal damages the opposite of the result suggested by the prior literature.  Following this approach to estimate cross-price elasticities with leisure for other major polluting goods could strongly influence estimates of optimal environmental taxes"--National Bureau of Economic Research web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 1/21/2005.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.