Pollution Charges as a Source of Public Revenues

  • Wallace E. Oates
Part of the A Publications of the Egon-Sohmen-Foundation book series (EGON-SOHMEN)


The economic theory of environmental regulation revolves around the concept of an externality — a form of social cost that is not borne by the agent who is its source. The theory carries with it a straightforward policy implication: to correct for the misallocation, in this case excessive emissions of pollutants, the regulatory agency can place a charge, a unit tax, on the offending activity that is equal to the marginal social damage. Such a Pigouvian tax serves to internalize the social cost associated with polluting emissions and can sustain an economically efficient level of environmental quality.


Marginal Abatement Cost Excess Burden Public Revenue Marginal Abatement Cost Curve Revenue Authority 
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© Springer-Verlag Berlin · Heidelberg 1993

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  • Wallace E. Oates

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