On the Efficiency of Destination and Origin Commodity Taxation in the Presence of Consumption Generated Cross-Border Pollution

Fabio Antoniou, Panos Hatzipanayotou, Michael Michael and Nikos Tsakiris ()

No 6221, CESifo Working Paper Series from CESifo

Abstract: We combine consumption generated cross-border pollution and public pollution abatement in a theoretical framework to examine the efficiency of the destination and origin principles of commodity taxation. The key result of our study is that with public pollution abatement, the non-cooperative equilibrium origin-based consumption taxes are set efficiently. This result holds not only in the context of symmetric countries, but under certain conditions carry over also to asymmetric countries. The non-cooperative equilibrium destination-based consumption taxes are inefficient. In the absence of public pollution abatement, the Nash equilibrium commodity taxes under either taxation principle are inefficient.

Keywords: commodity taxation; destination principle; origin principle; cross-border pollution (search for similar items in EconPapers)
JEL-codes: H21 H23 H87 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_6221

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