78362 - Taxation Policies and Environmental Issues

Course Unit Page


This teaching activity contributes to the achievement of the Sustainable Development Goals of the UN 2030 Agenda.

Affordable and clean energy Reduced inequalities Sustainable cities Responsible consumption and production

Academic Year 2021/2022

Learning outcomes

The course starts with an exposition of the different market failures (externalities, public goods, market power, asymmetric information), with emphasis on tourism and environmental issues. The course then focuses on taxation policies as remedy to market inefficiencies. After a general introduction on taxation principles, the student will learn the most advances in environmental taxation in promoting green growth as well as the most recent applications of taxation on tourism sector (road tax, tourist tax, congestion pricing).

Course contents


1 Introduction

Reasons for government interventions. Market failures. Normative vs positive economics.

Paternalism vs individual failures.

2 Externalities and Public Goods

Problems and Solutions. Environmental and Health Externalities. Applications to tourism sector.

3 Principal indices of public finance

Taxes and spending: descriptive statistics. Government budgeting.

4 Taxation in Theory and Practice

Taxation in Europe and around the world

Tax inefficiencies and their implications for optimal taxation. Tax incidence.

The equity implications of taxation: income distribution, transfers, welfare programs

Taxes on labour supply, consumption, savings.

Taxation and tourism market

PART II (Prof. Tavoni)

1: Fundamentals of Game Theory and Insights for Environmental Management

Social dilemmas. Social interactions. Social Norms. Behavioral game theory. Behavioral fallacies. Lessons for policymakers.

2: Environmental Policies

Correcting local externalities: Cooperation in the local commons. Correcting global externalities: International Environmental Agreements and Carbon Taxes. Theory and Applications in the Lab. Class Experiments. Theory and Applications in the Field.

3: The Role of Policy in Fostering the Diffusion of Low-Carbon Goods and Technologies

Encouraging the demand of environmentally friendly products via subsidies and taxes. Patents and innovation. Climate change mitigation. Marginal abatement curves. Environmental Kuznets Curve.


Part I: Jonathan Gruber, Public Finance and Public Policy, Fifth Edition, 2016, Worth Publishers, Chapter:

1,2,4,6,7,18, 19, 20, 21.

Part II: Chapters 4, 16, 20 from CORE Economics textbook: freely available at: https://www.core-econ.org/the-economy/book/text/0-3-contents.html . Assigned readings and lecture material.

Teaching methods

The course will be a combination of frontal lectures and student presentations.

Assessment methods

The exam is divided into two parts. Each part is a written test of 45 minutes. It is based on 2 open essay-style questions (4.5 points each question), 1 exercise (3 points) and 4 multiple choices (1 point each question). The maximum score attainable in each part is 16/32.

Notes or other materials are not allowed.

Grading is as follows:

  • <18 fail
  • 18-23 pass
  • 24-27 good
  • 28-30 very good
  • 30L excellent

Students can reject the grade obtained at the exam only twice. To this end, he/she must email a request to the instructor within the date set for registration. The instructor will confirm reception of the request within the same date. In the case of partial exams, rejection is intended with respect to the whole exam, whose grade is the average of the grades obtained in the two mid-terms: if the grade is rejected, the student must retake the full exam (consisting of both parts).

Office hours

See the website of Emanuela Randon

See the website of Alessandro Tavoni