Environmental Standards in a Large Open Economy
The small-country price-taking assumption of Oates and Schwab is relaxed to consider a large open economy that can influence its net capital return. This creates an incentive for the country to distort its policies. The key question asked is whether this induces inefficient outcomes. The result is t...
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| Format: | Journal Article |
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2015
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| Online Access: | http://hdl.handle.net/20.500.11937/22091 |
| _version_ | 1848750773924528128 |
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| author | Petchey, Jeffrey |
| author_facet | Petchey, Jeffrey |
| author_sort | Petchey, Jeffrey |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | The small-country price-taking assumption of Oates and Schwab is relaxed to consider a large open economy that can influence its net capital return. This creates an incentive for the country to distort its policies. The key question asked is whether this induces inefficient outcomes. The result is that if the country has a dedicated tax on capital and uses this tax optimally, the Oates and Schwab first-best result still holds. However, efficiency in a large open economy requires that the tax on capital be nonzero, unlike Oates and Schwab where the capital tax must be zero for first-best efficiency. |
| first_indexed | 2025-11-14T07:42:10Z |
| format | Journal Article |
| id | curtin-20.500.11937-22091 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T07:42:10Z |
| publishDate | 2015 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-220912017-09-13T13:54:25Z Environmental Standards in a Large Open Economy Petchey, Jeffrey The small-country price-taking assumption of Oates and Schwab is relaxed to consider a large open economy that can influence its net capital return. This creates an incentive for the country to distort its policies. The key question asked is whether this induces inefficient outcomes. The result is that if the country has a dedicated tax on capital and uses this tax optimally, the Oates and Schwab first-best result still holds. However, efficiency in a large open economy requires that the tax on capital be nonzero, unlike Oates and Schwab where the capital tax must be zero for first-best efficiency. 2015 Journal Article http://hdl.handle.net/20.500.11937/22091 10.1111/jpet.12098 restricted |
| spellingShingle | Petchey, Jeffrey Environmental Standards in a Large Open Economy |
| title | Environmental Standards in a Large Open Economy |
| title_full | Environmental Standards in a Large Open Economy |
| title_fullStr | Environmental Standards in a Large Open Economy |
| title_full_unstemmed | Environmental Standards in a Large Open Economy |
| title_short | Environmental Standards in a Large Open Economy |
| title_sort | environmental standards in a large open economy |
| url | http://hdl.handle.net/20.500.11937/22091 |