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The Effects of Pollution Taxes on Urban Areas with an Endogenous Plant Location

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Abstract

This paper has integrated space into the effect of a direct pollution control on the pollution damage of heavily populated areas like CBD. This integration gives us some new insights into the effectiveness of a pollution tax as a pollution control device when the plant location of the firm is endogenized. It is shown that when the plant location is endogenous, as pollution taxes become higher, the firm moves its plant towards the CBD, causing higher pollution damage to the CBD residents, if the production function exhibits decreasing returns to scale.

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Authors and Affiliations

  1. Department of Economics, National Taiwan University, Taipei, Taiwan, 10020

    Hong Hwang

  2. Sun Yat-Sen Institute for Social Sciences and Philosophy Academia Sinica, Nankang, Taipei, Taiwan, 11529, R.O.C

    Hong Hwang

  3. Department of Industrial Economics, Tamkang University, Tamsui, Taipei County, Taiwan, 25137, R.O.C.

    Chao-Cheng Mai

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  1. Hong Hwang
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  2. Chao-Cheng Mai
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Correspondence to Chao-Cheng Mai.

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Hwang, H., Mai, CC. The Effects of Pollution Taxes on Urban Areas with an Endogenous Plant Location. Environmental and Resource Economics 29, 57–65 (2004). https://doi.org/10.1023/B:EARE.0000035440.20693.f6

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  • DOI: https://doi.org/10.1023/B:EARE.0000035440.20693.f6

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