Resumen de Environmental taxes and strategic delegation

María Begoña Garzón San Felipe, Juan Carlos Bárcena Ruiz

• Abstract. This paper analyzes a managerial delegation model in which the government chooses an environmental tax to control environmental damage. By giving the managers of firms an incentive scheme based on a linear combination of profit and sales revenue, we show that firm owners have to pay a higher environmental tax and both environmental damage and social welfare increase compared to the profit-maximization case.