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Article
A Note on Weak Double Dividends
Topics in Economic Analysis & Policy (2008)
Abstract
A weak double-dividend is the proposition that the welfare improvement from a green tax reform, where the revenue from an environmental tax is used to reduce other tax rates, must be greater than the welfare improvement from a reform where the environmental taxes are returned in a lump sum fashion. We show in this note that a weak double-dividend need not hold in a world with multiple distortions. In an economy with multiple distortions one must choose carefully which tax rates to reduce, or one can do worse than a lump sum redistribution of the environmental tax revenues.
Keywords
  • environmental tax policy,
  • second-best taxation,
  • general equilibrium analysis
Publication Date
October 9, 2008
Citation Information
"A Note on Weak Double Dividends" Topics in Economic Analysis & Policy Vol. 4 Iss. 1 (2008)
Available at: http://works.bepress.com/gilbert_metcalf/4/