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The Analysis of Welfare Effects of an Environmental Product Tax: An Application to the Taxation of Car Tyres in Hungary
Author(s) -
Galarraga Ibon,
Markandya Anil
Publication year - 2003
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2003.tb00078.x
Subject(s) - economics , welfare , product (mathematics) , public economics , econometrics , microeconomics , market economy , mathematics , geometry
A sophisticated welfare analysis developed by Morris and Kis (1996) is presented here for the study of the effect of a product charge tax on the car tyre market in Hungary. The analysis is extended and complemented in this paper by, first, using the AIDS model and an algorithm developed by Galarraga and Markandya (2000) to estimate demand elasticities from limited data and, second, including the income effects into the analysis. The latter does not have much impact on the results but the generalisation of the model might be useful for the analysis of different goods where the proportion of income spent on them is more important.