Abstract
This paper explores the conjecture whether the Leviathan motive of politicians — to tax for the purpose of raising revenues rather than for benevolent, Pigovian motives — helps to overcome the inefficiency of international pollution spillovers such as in the cases of acid rain and global warming. It turns out that this conjecture is true in a static context that captures flow externalities, e.g., acid rain, as long as environmental damages are not too high. In contrast, Leviathan motives aggravate the already existing inefficiency in the case of stock externalities (e.g., global warming) despite probably high taxes at the beginning.
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A preliminary version of the paper was part of a presentation at the Annual European Meeting of the Public Choice Society in Valencia, Spain, April, 6th–9th, 1994. I acknowledge helpful comments and suggestions from an anonymous referee, the discussions with participants in Valencia and the support by Anne Barnett.
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Wirl, F. Can Leviathan governments mitigate the tragedy of the commons?. Public Choice 87, 363–377 (1996). https://doi.org/10.1007/BF00118654
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DOI: https://doi.org/10.1007/BF00118654