Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301300 
Year of Publication: 
2024
Series/Report no.: 
CESifo Working Paper No. 11174
Publisher: 
CESifo GmbH, Munich
Abstract: 
This paper develops a mechanism design approach to study externalities and re-distribution. The mechanism screens individuals’ social weights to strike a balance among broad distributional objectives, incentives to work, and incentives to reduce externalities. The welfare-optimal allocation can be decentralized through income taxation, defining income-dependent externality payments. Two applications use individual-level administrative data on incomes, pollution measures, and financial burdens to demonstrate how population characteristics shape the optimal policy on carbon emissions.
Subjects: 
Pigouvian taxation
optimal income taxation
inequality
climate change
JEL: 
D82
H21
H23
Q54
Q58
Document Type: 
Working Paper
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