Economics · Environmental Taxation
The 'double dividend hypothesis' in environmental taxation suggests that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Tradeable permits are twice as efficient as Pigouvian taxes in achieving the social optimum
- 2A carbon tax always generates twice the revenue compared to an equivalent regulatory standard
- 3The benefits of pollution reduction always outweigh the costs by a factor of two
- 4A green tax can simultaneously reduce pollution and reduce economic distortions if revenues are recycled to cut labour or capital taxes✓
Correct answer
A green tax can simultaneously reduce pollution and reduce economic distortions if revenues are recycled to cut labour or capital taxes
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