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Title: Pigouvian taxation in tourism
Authors: Piga, Claudio
Keywords: Differential game
Land use
Tourism
Taxation
Issue Date: 2006
Publisher: © Loughborough University
Series/Report no.: Loughborough University. Department of Economics. Discussion Paper Series;WP 2006 -2
Abstract: The paper studies the characteristics and the effects of a tax imposed by a local government on the land used to create new tourists' accommodations. First, a dynamic policy game between a monopolist in a tourist area and a local government is considered. In each period the former has to decide the size of land undergoing development whereas the latter has to choose the tax to levy on each newly developed area unit. Linear Perfect Markov strategies are derived for both the non-cooperative and the public monopoly case. In equilibrium a public monopoly would develop land more rapidly than a private monopoly. Furthermore, the more the monopolist discounts the future, the more the long run use of the natural resource is reduced. Second, the properties of the tax are studied considering an oligopolistic market structure. The tax alone does not lead to the socially optimal level of land use. However, its combined effect with another policy instrument such as a quota induces the optimal level of resource use.
Description: This paper is also available at: http://ideas.repec.org/p/lbo/lbowps/2006_2.html. It is the working paper version of an article published on Environmental and Resource Economics, 26 (3), pp. 343-359.
Version: Published
URI: https://dspace.lboro.ac.uk/2134/4630
ISSN: 1750-4171
Appears in Collections:Working Papers (Economics)

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