要 旨
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This study examines the optimal combination of emission and fuel taxes for reducing
greenhouse gas emissions in oligopolies. Greenhouse gases are emitted at both the
production and consumption stages (life-cycle emissions). When consumers decide how
much to use products, heavier taxes should be imposed on fuel consumption than on
production. In other words, a strictly positive fuel tax is necessary in addition to an
effective emission tax. The combination of taxes for polluters (emission and fuel taxes)
may achieve first-best optimality under market power without any explicit subsidies.
We also show that the optimal fuel tax converges to zero when the number of producers
becomes sufficiently large. This implies that fuel taxes may be redundant in perfectly
competitive markets.
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