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Tradable Emission Permits and Strategic Capital Taxation

Author

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  • Nikos Tsakiris
  • Panos Hatzipanayotou
  • Michael S. Michael
Abstract
In a model of two large asymmetric countries, we examine the effectiveness of the non-cooperative setting of tradable emission permits in reducing global pollution, under different rules of international taxation of capital earnings. Our key result is that, under certain conditions, the lowest Nash equilibrium level of global pollution is achieved when the policy-mix combines internationally, rather than nationally, tradable emission permits and either capital-tax exemptions or capital-tax credits.

Suggested Citation

  • Nikos Tsakiris & Panos Hatzipanayotou & Michael S. Michael, 2022. "Tradable Emission Permits and Strategic Capital Taxation," University of Cyprus Working Papers in Economics 01-2022, University of Cyprus Department of Economics.
    • Handle: RePEc:ucy:cypeua:01-2022
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    References listed on IDEAS

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    More about this item

    Keywords

    Emission Permits; Cross-border Pollution; Capital Tax Competition; Capital Tax Rules;
    All these keywords.

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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