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Tax interaction effects, environmental regulation, and "rule of thumb" adjustments to social cost

Publication ,  Journal Article
Murray, BC; Keeler, A; Thurman, WN
Published in: Environmental and Resource Economics
January 1, 2005

Preexisting distortions in factor markets complicate the estimation of the social welfare effects of regulatory interventions. The existence of these tax interaction effects (TIEs) suggests that general equilibrium (GE) approaches should be used to evaluate regulatory policies. However, formal GE analysis is not always feasible for the numerous environmental regulations proposed by federal, state, and local agencies. The question addressed in this paper is whether an empirically based "rule of thumb" upward adjustment factor is appropriate to properly scale social cost estimates in environmental policy. We argue that such rule of thumb adjustments are significantly less reliable than estimates based on a detailed general equilibrium analysis because of the uncertainty about both the magnitude and sign of the social cost distortion. In addition to addressing this question, the paper gives an overview of TIEs and their relevance to environmental policy. © Springer 2005.

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Published In

Environmental and Resource Economics

DOI

ISSN

0924-6460

Publication Date

January 1, 2005

Volume

30

Issue

1

Start / End Page

73 / 92

Related Subject Headings

  • Agricultural Economics & Policy
  • 3899 Other economics
  • 3801 Applied economics
  • 1499 Other Economics
  • 1402 Applied Economics
  • 0502 Environmental Science and Management
 

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Murray, B. C., Keeler, A., & Thurman, W. N. (2005). Tax interaction effects, environmental regulation, and "rule of thumb" adjustments to social cost. Environmental and Resource Economics, 30(1), 73–92. https://doi.org/10.1007/s10640-004-2379-1
Murray, B. C., A. Keeler, and W. N. Thurman. “Tax interaction effects, environmental regulation, and "rule of thumb" adjustments to social cost.” Environmental and Resource Economics 30, no. 1 (January 1, 2005): 73–92. https://doi.org/10.1007/s10640-004-2379-1.
Murray BC, Keeler A, Thurman WN. Tax interaction effects, environmental regulation, and "rule of thumb" adjustments to social cost. Environmental and Resource Economics. 2005 Jan 1;30(1):73–92.
Murray, B. C., et al. “Tax interaction effects, environmental regulation, and "rule of thumb" adjustments to social cost.” Environmental and Resource Economics, vol. 30, no. 1, Jan. 2005, pp. 73–92. Scopus, doi:10.1007/s10640-004-2379-1.
Murray BC, Keeler A, Thurman WN. Tax interaction effects, environmental regulation, and "rule of thumb" adjustments to social cost. Environmental and Resource Economics. 2005 Jan 1;30(1):73–92.
Journal cover image

Published In

Environmental and Resource Economics

DOI

ISSN

0924-6460

Publication Date

January 1, 2005

Volume

30

Issue

1

Start / End Page

73 / 92

Related Subject Headings

  • Agricultural Economics & Policy
  • 3899 Other economics
  • 3801 Applied economics
  • 1499 Other Economics
  • 1402 Applied Economics
  • 0502 Environmental Science and Management