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Promoting Demand for Organic Food Under Preference and Income Heterogeneity

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Author Info
Eerola, Essi
Huhtala, Anni

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Abstract

We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic products as an example. Two instruments are considered: a price subsidy for the organic products and a tax on the conventional products. Under income disparity, consumers with high income always prefer a socially optimal subsidy to a socially optimal tax, while low-income consumers prefer a tax on conventional products. When environmental policy is determined by the median voter, the policies implemented tend to be stricter than socially optimal policies if income differences are large.

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Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24664.

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Date of creation: 2005
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Handle: RePEc:ags:eaae05:24664

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Related research
Keywords: taxation; preference heterogeneity; income disparity; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety;

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  4. Pauline M. Ippolito, 2003. "Asymmetric Information in Product Markets: Looking to Other Sectors for Institutional Approaches," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(3), pages 731-736, 08. [Downloadable!] (restricted)
  5. Annegrete Bruvoll & Karine Nyborg, 2004. "The Cold Shiver of Not Giving Enough: On the Social Cost of Recycling Campaigns," Land Economics, University of Wisconsin Press, vol. 80(4). [Downloadable!] (restricted)
  6. West, Sarah E. & Williams, R.C.Roberton III, 2004. "Estimates from a consumer demand system: implications for the incidence of environmental taxes," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 535-558, May. [Downloadable!] (restricted)
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  7. Hamilton, Stephen F. & Sunding, David L. & Zilberman, David, 2003. "Public goods and the value of product quality regulations: the case of food safety," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 799-817, March. [Downloadable!] (restricted)
  8. McAusland, Carol, 2003. "Voting for pollution policy: the importance of income inequality and openness to trade," Journal of International Economics, Elsevier, vol. 61(2), pages 425-451, December. [Downloadable!] (restricted)
  9. Bjorner, Thomas Bue & Hansen, L.G.Lars Garn & Russell, Clifford S., 2004. "Environmental labeling and consumers' choice--an empirical analysis of the effect of the Nordic Swan," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 411-434, May. [Downloadable!] (restricted)
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This page was last updated on 2009-11-26.

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