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Environmental Information Provision as a Public Policy Instrument

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  • Petrakis Emmanuel

    ()
    (University of Crete)

  • Sartzetakis Eftichios Sophocles

    ()
    (University of Macedonia)

  • Xepapadeas Anastasios

    ()
    (University of Crete)

Abstract

We examine information provision as a public policy instrument when products generate damages to consumers as well as environmental externalities. We show that information provision dominates taxation in terms of welfare, if information can be provided at low cost. This is because a uniform tax alone levies a heavier than optimal burden on informed consumers and allows the uninformed consumer to free ride partially on the informed consumers’ voluntary actions. If the cost of information provision is substantial, taxation is welfare superior. A policy regime that combines information provision and taxation leads to higher welfare relative to the use of either instrument alone.

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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 4 (2005)
Issue (Month): 1 (November)
Pages: 1-33

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Handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:14

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Cited by:
  1. Lehmann, Paul, 2008. "Using a Policy Mix for Pollution Control – A Review of Economic Literature," MPRA Paper 21354, University Library of Munich, Germany.
  2. Maria José Gil-Moltó & Dimitrios Varvarigos, 2011. "Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers," Discussion Papers in Economics 11/49, Department of Economics, University of Leicester.
  3. Aditi Sengupta, 2011. "Investment in Cleaner Technology and Signaling Distortions in a Market with Green Consumers," Auburn Economics Working Paper Series auwp2011-10, Department of Economics, Auburn University.
  4. Eftichios S. Sartzetakis & Anastasios Xepapadeas & Emmanuel Petrakis, 2009. "The Role of Information Provision as a Policy Instrument to Supplement Environmental Taxes: Empowering Consumers to Choose Optimally," Working Papers 2009.46, Fondazione Eni Enrico Mattei.
  5. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers 1001, Southern Methodist University, Department of Economics.
  6. Kallbekken, Steffen & Westskog, Hege & Mideksa, Torben K., 2010. "Appeals to social norms as policy instruments to address consumption externalities," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 447-454, August.
  7. Lucie Bottega & Jenny De Freitas, 2009. "Public, private and nonprofit regulation for environmental quality," DEA Working Papers 33, Universitat de les Illes Balears, Departament d'Economía Aplicada.
  8. Jesse Matheson, 2011. "Prices and social behavior: A study of adult smoking in Canadian Aboriginal communities," Discussion Papers in Economics 11/50, Department of Economics, University of Leicester, revised Dec 2012.
  9. Andrea Podhorsky, 2009. "Environmental Labeling," Working Papers 2009_3, York University, Department of Economics.
  10. Aditi Sengupta, 2012. "Competitive Investment in Clean Technology and Uninformed Green Consumers," Auburn Economics Working Paper Series auwp2012-08, Department of Economics, Auburn University.

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