@article{Jaeger:296624,
      recid = {296624},
      author = {Jaeger, William},
      title = {SETTING ENVIRONMENTAL TAXES IN A SECOND-BEST WORLD},
      address = {2001-02},
      number = {2276-2019-4762},
      series = {RP-186},
      pages = {40},
      year = {2001},
      abstract = {This paper compares the optimal environmental tax with two  alternative definitions of marginal environmental damages.  One definition reflects the social marginal rate of  substitution between income and the environment; the other  reflects the sum of households' marginal willingness to  pay. The analysis finds that the definition based on the  social marginal rate of substitution provides a consistent  benchmark for setting environmental taxes that is  compatible with both the Pigouvian principle and the double  dividend hypothesis. The definition based on the sum of  households' marginal willingness to pay, however, is found  to be incompatible with optimal taxation and an unreliable  benchmark for making welfare inferences.},
      url = {http://ageconsearch.umn.edu/record/296624},
      doi = {https://doi.org/10.22004/ag.econ.296624},
}