Go to main navigation Navigation menu Skip navigation Home page Search

Brown bag seminar | Pigovian income taxation

Welcome to the next SITE brown bag seminar! On 21 November, Prof. Lassi Ahlvik from University of Helsinki will present and discuss his working paper entitled "Pigovian income taxation" at SSE . In pursuit of equitable solutions for externalities, Prof, Ahlvik and co-authors propose a model linking income and Pigouvian taxes.

Working paper title: Pigovian income taxation

By: Lassi Ahlvik, Matti Liski, Mikael Mäkimattila


How to fight grand externalities without hurting the poor? We develop a mechanism design model for externality problems with redistribution goals. The welfare-optimal mechanism ties together individuals' choices on incomes and the externality, leading to income-dependent Pigouvian taxes. A policy reflecting aversion to inequity can optimally set externality taxes that are increasing or decreasing in income, yet preserving the net progression: the two tax rates adjust in opposite directions to preserve the income tax progression. Whether the Pigouvian level is exceeded and whether progressivity or regressivity arises depends on welfare weights on burdens between and within income groups, behavioral responses to incentives on the externality, and earnings distortions due to redistribution. We conclude with applications to (i) cars and (ii) electricity using individual-level register data to illustrate the magnitude of the main mechanisms.

About the speaker

Lassi Ahlvik is an associate professor in Environmental and Resource Economics, University of Helsinki and Helsinki GSE. [...] Click "Expand" below to learn more!

Prof. Ahlvik has a Ph.D. in Economics from Aalto University in Helsinki. Ahlvik is working on applied economic theory, with a focus on environmental economics, game theory and information economics. Learn more about the speaker >>

Interested in attending the SITE brown bag seminar at SSE or online via Zoom?

The link to the seminar will be distributed by invitation only. If you are interested in attending the seminar – please contact site@hhs.se. Follow the instructions below:

  • Type the subject box with “Brown bag seminar *INSERT SEMINAR TITLE*”
  • Indicate your affiliation and field of interest
  • Please also indicate if you want to attend in person or online

For registered applicants, a Zoom link will be provided prior to the event via email with further instructions.

Photo: mozakim, Shutterstock


Follow us on social media to get the latest updates from SITE


SITE Climate Energy Environment Economics Brown bag