From an economic perspective the continuing debate about environmental taxes, particularly in connection with climate protection, essentially revolves around two questions: -the effects of such taxes on international competitiveness, -the employment effects of an "ecological tax reform". The current research status regarding the theory of foreign trade and the labour market theory suggests that an assessment of the effects environmental taxes have on foreign trade and employment is inadequate if a model is used with homogeneous goods and perfect competition, since such an approach is unable to explain essential phenomena such as intra-industrial trade or unemployment. In contrast, both the recent theory of foreign trade and the labour market theory are built on the notion of product heterogeneity and on the model of monopolistic competition based thereon, with which the effects environmental taxes have on trade and the labour market can be explained more in keeping with the problem. Monopolistic competition, however, is disregarded in existing simulation analyses of the effects environmental taxes have on foreign trade and employment. That is why an appropriate expansion of existing simulation models is called for. Against this background the project aims at further developing existing simulation models in environmental economics by integrating more recent approaches in foreign trade and labour market theories, and at using these models for an analysis of the effects environmental taxes have on foreign trade and employment.

Project duration

01.07.1998 - 30.06.2000

Contact
Client

VolkswagenStiftung (VWS), Hannover Schwerpunktprogramm: Umwelt als knappes Gut: Steuerungsverfahren und Anreize zur Schadstoff- und Abfallverringerung, Hannover, DE