We show how "corrective" taxation can improve the efficiency properties of tradable quotas systems affcted by market power. Indeed, when only a subset of fi rms are price takers while the remaining firms enjoy market power, the regulator may set an ad hoc taxation on firms' traded quotas that can restore cost effectiveness without necessarily driving dominant firm(s) net demand to zero. Cost effectiveness with market power and quotas taxation implies some cost in terms of tax revenue that, however, can be justified from a social welfare perspective. Moreover, all firms may result to be better off when the corrective taxation is implemented.
Tradable Quotas Taxation and Market Power
VALENTINI, Edilio;
2016-01-01
Abstract
We show how "corrective" taxation can improve the efficiency properties of tradable quotas systems affcted by market power. Indeed, when only a subset of fi rms are price takers while the remaining firms enjoy market power, the regulator may set an ad hoc taxation on firms' traded quotas that can restore cost effectiveness without necessarily driving dominant firm(s) net demand to zero. Cost effectiveness with market power and quotas taxation implies some cost in terms of tax revenue that, however, can be justified from a social welfare perspective. Moreover, all firms may result to be better off when the corrective taxation is implemented.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
