Hedonic vs Environmental Quality: Which Policy Can Help in Lowering Pollution Emissions?
AbstractIn this paper we compare two policy instruments that can be adopted to curb carbon emissions. The first is a conventional pollution tax. The second is an environmental campaign aiming to influence consumers to switch to a green good. We consider two different scenarios. When consumers are characterized by hedonic quality preferences, in this case the pollution tax is more efficient than the campaign. On the contrary, when consumers develop environmental quality preferences, there are cases in which the campaign is preferred. To sum up, while both policy instruments are effective in reducing pollution emissions, their efficiency viewed from a welfare perspective crucially depends on consumers' environmental awareness.
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Bibliographic InfoPaper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp906.
Date of creation: Oct 2013
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Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-10-11 (Agricultural Economics)
- NEP-ALL-2013-10-11 (All new papers)
- NEP-ENE-2013-10-11 (Energy Economics)
- NEP-ENV-2013-10-11 (Environmental Economics)
- NEP-RES-2013-10-11 (Resource Economics)
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