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Based on Pigou’s view, environmental taxation increases the cost of
polluting activities reflecting the true social cost imposed on societies by the
environmental damage caused by these activities Imposing an emissions tax is a
standard way to internalize the external pollution damages into producers’ decisionmaking.
An efficient outcome is attained when marginal external cost of emissions
is identical for all producers and equal to marginal abatement cost of each producer.
When producers are heterogeneous however a uniform emission charge usually
fails to satisfy these requirements. In this case ideally taxes should be differentiated
across pollution sources to consider variations in the marginal damage caused
by their respective activities. In this paper the total pollution cost is related with
contaminated locations and a weighte location differentiated tax together with a
corresponding index that adjusts taxation to the damages caused, is proposed. The
weights follow a gamma-order normal distribution, which is described by shape,
location and scale parameters allowing for some flexibility in the measure of
spatially differentiated environ mental impacts