Optimal emission charges and the differential taxation of leaded gasoline

Abstract

This paper does not take sides about the velocity of the lead phasedown in Argentina nor about the (benefit-cost or cost effective oriented) policy design for its accomplishment. Rather, our motivation is to explore conditions for the use of emission charges in a general framework of optimal indirect taxation in order to guide pricing policies during the transition. Instead of seeing taxes as the only, or even the main, instrument to guide such a transition program, we alert on the consequences of neglecting taxes and thus giving wrong signals to consumers and producers while al the same time attempting to imposse a chronogram for substitution, In this vein, we attempt to contribute to the design of emission charges although we do not, at this sage, make progress towards computational aspects.