| Summary: | 碩士 === 僑光科技大學 === 財務金融研究所 === 105 === This paper which base on Chiou and Hu (2001) framework encourage firm improve pollution-prevention-cure through subsidy of Tax. Besides, from Chin-Piao Yeh Tax policy model, it quotes quantity subsidy and pollution-prevention-cure subsidy. Therefore, the subsidies can yield respectively optimum quantity, quantity of improve pollution-prevention-cure, and social welfare. Furthermore, the better subsidy is found. This paper’s model follows a multi-stage game. In first stage, government decides the tax policy to maximum social welfare. In second stage, firm decides their respectively pollution through tax policy. In third stage, firms go into the quantity competition on product market.
Major findings of the model are (1) Quantity, social welfare, and quantity of pollution-prevention-cure are inverse proportion to tax rate, but subsidy rate of quantity and subsidy rate of pollution-prevention-cure are direct proportion to tax rate. (2) Government should increase Tax-credit rate for higher pollution-prevention-cure, when the improvement is the main environment policy. (3) Tax-credit is more operative than subsidy policy, when the pas-tax-credit rate is more preferential than subsidy rate. (4) Quantity of pollution is lower under tax-credit of pollution-prevention-cure than ubsidy of quantity. (5) Pollution is always decreased by a rise tax rate.under s
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