Document Type : ORIGINAL ARTICLE

Authors

• Ebrahim Hadian
• Ali Hussein Ostadzad

Abstract

Environmental damage caused by economic activities is known as one of the most important side that affecting social welfare adversely. Pollution emissions related with more economic activities reduce positive impact of economic growth on social welfare. Hence concern of policy makers is to formulate and implement the economic planning in order to control environmental damage caused by expanding of economic activities. One of these control instruments is to levy a pollution tax. Therefore in this paper we are tried to calculate the optimal level of pollution tax for Iranian economy using an augmented growth model. To this end, we intended a tripartite model consists of households, firms and government.  After solving the model, we estimated optimal pollution tax using data of Iranian economy. Calibrating the solved model, the optimal pollution tax is estimated about 7.8 thousand Rials per ton of CO₂ emissions. 

Keywords

• Pollution Tax
• Augmented Growth Model
• Iranian Economy