Cremer, Helmuth, De Donder, Philippe, Maldonado, Darío and Pestieau, Pierre (2011) Taxing sin goods and subsidizing health care. Scandinavian Journal of Economics, vol. 114 (n°1). pp. 101-123.

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Abstract

We study the taxation of sin goods in a two-period, three-good model. Individuals can buy health care to compensate for the damages caused by their earlier sin-good consumption. Individuals are myopic and underestimate the effect of the sinful consumption on health; in their second period, they may acknowledge their mistake or persist in their error. We characterize and compare the first-best and the (linear) second-best taxes in these different settings. In particular, we examine how the results are affected by the way sin-good consumption and health care interact in health production technology.

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• Taxing Sin Goods and Subsidizing Health Care. (deposited 18 Jan 2012 05:49)
  • Taxing sin goods and subsidizing health care. (deposited 09 Jul 2014 17:15) [Currently Displayed]