Data and Code for: The Welfare Impact of Second-Best Uniform Pigouvian Taxation
- Knittel, Christopher (MIT)
- Sandler, Ryan (Consumer Financial Protection Bureau)
AbstractWhen consumers or firms don't face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, but it may be infeasible to tax the externality directly. The alternative, taxing a related product, will be second-best. In this paper, we show that in the presence of heterogeneous externalities and elasticities, this type of indirect tax performs poorly. In our empirical application, gasoline taxes to address pollution externalities, less than a third of the deadweight loss of the externality is addressed by second-best optimal taxes.
1996-01-01 / 2010-12-31Time Period: Mon Jan 01 00:00:00 EST 1996--Fri Dec 31 00:00:00 EST 2010
California, United States of America
Is supplement to
DOI: 10.1257/pol.20160508 (Text)
Knittel, Christopher R., and Ryan Sandler. “The Welfare Impact of Second-Best Uniform-Pigouvian Taxation: Evidence from Transportation.” American Economic Journal: Economic Policy 10, no. 4 (November 2018): 211–42. https://doi.org/10.1257/pol.20160508.
- ID: 10.1257/pol.20160508 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2020-04-08