The general equilibrium incidence of environmental taxes ☆

@inproceedings{Fullerton2007TheGE,
  title={The general equilibrium incidence of environmental taxes ☆},
  author={Don Fullerton and Garth Heutel},
  year={2007}
}
We study the distributional effects of a pollution tax in general equilibrium, with general forms of substitution where pollutionmight be a relative complement or substitute for labor or for capital in production. We find closed form solutions for pollution, output prices, and factor prices. Various special cases help clarify the impact of differential factor intensities, substitution effects, and output effects. Intuitively, the pollution tax might place disproportionate burdens on capital if… CONTINUE READING
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