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Voting for environmental policy under income and preference heterogeneity

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Author Info
Huhtala, Anni
Eerola, Essi

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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 food products as an example. Two instruments are considered: a price subsidy for the organic food 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 MTT Agrifood Research Finland in its series Discussion Papers with number 11863.

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Date of creation: 2005
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Handle: RePEc:ags:mttfdp:11863

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Keywords: Environmental Economics and Policy;

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  1. West, Sarah E., 2004. "Distributional effects of alternative vehicle pollution control policies," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 735-757, March. [Downloadable!] (restricted)
  2. Nyborg, Karine & Howarth, Richard B. & Brekke, Kjell Arne, 2006. "Green consumers and public policy: On socially contingent moral motivation," Resource and Energy Economics, Elsevier, vol. 28(4), pages 351-366, November. [Downloadable!] (restricted)
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  3. 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)
  4. Brooks, Nancy & Sethi, Rajiv, 1997. "The Distribution of Pollution: Community Characteristics and Exposure to Air Toxics," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 233-250, February. [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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  1. Markus Haavio & Kaisa Ilona Kotakorpi, 2009. "The Political Economy of Sin Taxes," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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