Prague Economic Papers 2009, 18(4):353-365 | DOI: 10.18267/j.pep.359

Environmental Taxes and Wage Setting Structure

Juan Carlos Bárcena-Ruiz, María Begoña Garzón
Departamento de Fundamentos del Análisis Económico I, Universidad del País Vasco. Avenida Lehendakari Aguirre, 83; 48015 Bilbao, Spain (juancarlos.barcena@ehu.es; mariabegona.garzon@ehu.es).

The literature on the environment shows that imperfect competition in global markets creates a strategic interaction between governments that can lead to the ineficient distortion of environmental taxes. This literature does not consider that workers can set up different organizational structures to set wages. We assume that under decentralized wage setting there is an independent union in each irm while under centralized wage setting there is an industry-wide union that sets the wages of all irms. We show that under a decentralized structure governments choose environmental taxes closer to those which are socially eficient than those chosen under a centralized structure. However, environmental damage is greater in the former case.

Keywords: international trade, oligopoly, environmental taxes, unions´ structure
JEL classification: H23, J51

Published: January 1, 2009  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Bárcena-Ruiz, J.C., & Garzón, M.B. (2009). Environmental Taxes and Wage Setting Structure. Prague Economic Papers, 18(4), 353-365. doi: 10.18267/j.pep.359
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Aronsson, T., Blomquist, S. (2003), "Optimal Taxation, Global Externalities and Labor Mobility." Journal of Public Economics, 87, pp. 2749-2764. Go to original source...
    2. Bárcena-Ruiz, J. C., Garzón, M. B. (2003), "Strategic Environmental Standards, Wage Incomes and the Location of Polluting Firms." Environmental and Resource Economics 24, pp. 121-139. Go to original source...
    3. Bárcena-Ruiz, J. C. (2003), "Politically Preferred Wage Bargaining Structures." European Journal of Political Economy, 19, pp. 341-353. Go to original source...
    4. Barrett, S. (1994), "Strategic Environmental Policy and International Trade." Journal of Public Economics, 54, pp. 325-338. Go to original source...
    5. Bosquet, B. (2000), "Environmental Tax Reform: Does it Work? A Survey of the Empirical Evidence." Ecological Economics 34, pp. 19-32. Go to original source...
    6. Brander, J., Spencer, B. (1988), "Unionized Oligopoly and International Trade Policy." Journal of International Economics, 24, pp. 217-234. Go to original source...
    7. Booth, A. (1995), The Economics of the Trade Union. Cambridge; New York: Cambridge University Press.
    8. Bughin, J., Vanini S. (1995), "Strategic Direct Investment under Unionized Oligopoly." International Journal of Industrial Organization, 13, pp. 127-145. Go to original source...
    9. Carraro, C., Galeotti, M., Gallo, M. (1995), "Environmental Taxation and Unemployment: some Evidence on the "Double Dividend Hypothesis" in Europe." Journal of Public Economics, 62, pp. 141-181. Go to original source...
    10. Chiroleu-Assouline, M., Fodha, M. (2006), "Double Dividend Hypothesis, Golden Rule and Welfare Distribution." Journal of Environmental Economics and Management, 51, pp. 323-335. Go to original source...
    11. Davidson, C. (1988), "Multiunit Bargaining in Oligopolistic Industries." Journal of Labor Economics, 6, pp. 397-422. Go to original source...
    12. Dobson, P. W. (1994), "Multiirm Unions and the Incentive to Adopt Pattern Bargaining in Oligopoly." European Economic Review, 38, pp. 87-100. Go to original source...
    13. Falk, I., Mendelson, R. (1993), "The Economics of Controlling Stock Pollutants: An Eficient Strategy for Greenhouse Gases." Journal of Environmental Economics and Management, 25, pp. 75-88. Go to original source...
    14. Farber, H. (1996), "The Analysis of Union Behavior," in Ashenfelter, O., Layard, R., eds., Handbook of Labor Economics. Vol. II, Elsevier Science Publishers.
    15. Fredriksson, P. G., Gaston, N. (1999), "The "Greening" of Trade Unions and the Demand for Eco-Taxes." European Journal of Political Economy, 15, pp. 663-686. Go to original source...
    16. Goulder, L. H. (1995), "Environmental Taxation and the "Double Dividend": a Reader's Guide." International Taxation and Public Finance, 2, pp. 157-183. Go to original source...
    17. Hartog J., Theeuwes, J. (1993), Labour Markets Contracts and Institutions. Amsterdam: North Holland.
    18. Hoel, M. (1997), "Environmental Policy with Endogenous Plant Locations." Scandinavian Journal of Economics, 99, pp. 241-259. Go to original source...
    19. Horn, H., Wolinsky, A. (1988), "Bilateral Monopolies and Incentives for Merger." Rand Journal of Economics, 19, pp. 408-419. Go to original source...
    20. Jayadevappa, R., Chhatre, S. (2000), International Trade and Environmental Quality. A Survey, Ecological Economics, 32, pp. 175-194. Go to original source...
    21. Kennedy, P. (1994), "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition." Journal of Environmental Economics and Management, 27, pp. 49-63. Go to original source...
    22. Majocchi, A. (1996), "Green Fiscal Reform and Employment: A Survey." Environmental and Resource Economics, 8, pp. 375-397. Go to original source...
    23. Malcomson, J. (1987), "Trade Union Labor Contracts: An Introduction." European Economic Review, 31, pp. 139-148. Go to original source...
    24. Markusen, J. R., Morey, E. R., Olewiler, N. (1993), "Environmental Policy when Market Structure and Plant Locations are Endogenous." Journal of Environmental Economics and Management, 24, pp. 69-86. Go to original source...
    25. Markusen, J. R. (1997), "Costly Pollution Abatement, Competitiveness and Plant Location Decisions." Resource and Energy Economics, 19, pp. 299-320. Go to original source...
    26. Mezzettti, C., Dinopoulos, E. (1991), "Domestic Unionization and Import Competition." Journal of International Economics, 31, pp. 79-100. Go to original source...
    27. McDonald, I., Solow, R. (1981), "Wage Bargaining and Employment." American Economic Review, 71, pp. 896-908.
    28. Motta, M., Thisse, J. F. (1994), "Does Environmental Dumping Lead to Delocation?" European Economic Review, 38, pp. 563-576. Go to original source...
    29. Naylor, R. (1998), "International Trade and Economic Integration when Labour Markets are Generally Unionised." European Economic Review, 42, pp.1251-1267. Go to original source...
    30. Oswald, A. J. (1985), "The Economic Theory of Trade Unions: an Introductory Survey." Scandinavian Journal of Economics, 87, pp. 160-183. Go to original source...
    31. Porter, M., van der Linde, C. (1995), "Toward a New Conception of the Environment-Competitiveness Relationship." Journal of Economic Perspectives, 9, pp. 97-118. Go to original source...
    32. Rauscher, M. (1995), "Environmental Regulation and the Location of Polluting Industries." International Taxation and Public Finance, 2, pp. 229-244. Go to original source...
    33. Smulders, S. (2001), "Environmental Taxation in Open Economies: Trade Policy Distortions and the Double Dividend," in Schulze, G., Ursprung, H., eds., International Environmental Economics: A Survey of the Issues. Oxford: Oxford University Press.
    34. Ulph, A. (1996), "Environmental Policy and International Trade when Governments and Producers Act Strategically." Journal of Environmental Economics and Management, 30, pp. 265-281. Go to original source...
    35. van der Ploeg, F., de Zeeuw A. J. (1992), "International Aspects of Pollution Control." Environmental and Resource Economics, 2, pp. 117-139. Go to original source...
    36. Wagner, T. (2005), "Environmental Policy and the Equilibrium Rate of Unemployment." Journal of Environmental Economics and Management, 49, pp. 132-156. Go to original source...
    37. Xepapadeas, A., de Zeeuw A. J. (1999), "Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital." Journal of Environmental Economics and Management, 37, pp. 165-182. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content