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Energy Taxes as a Signaling Device: An Empirical Analysis of Consumer Preferences

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  • Ghalwash, Tarek

    ()
    (Department of Economics, Umeå University)

Abstract

This paper presents an econometric study dealing with household demand in Sweden. The main objective is to empirically examine the differences in consumer reaction to the introduction of, or the change, in environmental taxes. Main focus is on environmental taxes as a signaling device. The hypothesis is that the introduction of an environmental tax provides new information about the properties of the directly taxed goods. This in turn may affect consumer preferences for these goods, hence altering the consumption choice. The result from the econometric analysis shows that all goods have negative own-price elasticities, and positive income elasticities. Concerning the signalling effect of environmental taxes the results are somewhat ambiguous. The tax elasticity for energy goods used for heating seems to be significantly higher than the traditional price elasticity, whereas the opposite seems to be the case for energy goods used for transportation.

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Bibliographic Info

Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 646.

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Length: 23 pages
Date of creation: 22 Dec 2004
Date of revision:
Handle: RePEc:hhs:umnees:0646

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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
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Web page: http://www.econ.umu.se/
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Keywords: Household demand; energy tax; tax elasticities; emissions;

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References

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  1. F. Barigozzi & B. Villeneuve, 2004. "The signaling effect of tax policy," Working Papers 500, Dipartimento Scienze Economiche, Universita' di Bologna.
  2. Hansen, Bruce E., 1992. "Testing for parameter instability in linear models," Journal of Policy Modeling, Elsevier, Elsevier, vol. 14(4), pages 517-533, August.
  3. Brännlund, Runar & Ghalwash, Tarek & Nordström, Jonas, 2004. "Increased Energy Efficiency and the Rebound Effect: Effects on consumption and emissions," UmeÃ¥ Economic Studies, UmeÃ¥ University, Department of Economics 642, Umeå University, Department of Economics.
  4. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 312-26, June.
  5. Berkhout, Peter H. G. & Ferrer-i-Carbonell, Ada & Muskens, Jos C., 2004. "The ex post impact of an energy tax on household energy demand," Energy Economics, Elsevier, Elsevier, vol. 26(3), pages 297-317, May.
  6. Garcia-Cerrutti, L. Miguel, 2000. "Estimating elasticities of residential energy demand from panel county data using dynamic random variables models with heteroskedastic and correlated error terms," Resource and Energy Economics, Elsevier, Elsevier, vol. 22(4), pages 355-366, October.
  7. Heller, H Robert & Khan, Mohsin S, 1979. "The Demand for Money and the Term Structure of Interest Rates," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(1), pages 109-29, February.
  8. Halvorsen, Bente & Larsen, Bodil M., 2001. "The flexibility of household electricity demand over time," Resource and Energy Economics, Elsevier, Elsevier, vol. 23(1), pages 1-18, January.
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Cited by:
  1. Nicolau, Mihaela, 2009. "The influence of taxation on energy products price and consequences on the global economy," MPRA Paper 22210, University Library of Munich, Germany, revised 10 Dec 2009.
  2. Mao Xianqiang & Yang Shuqian & Liu Qin, 2013. "The Way to CO2 Emission Reduction and the Co-benefits of Local Air Pollution Control in China's Transportation Sector: A Policy and Economic Analysis," EEPSEA Research Report, Economy and Environment Program for Southeast Asia (EEPSEA) rr2013036, Economy and Environment Program for Southeast Asia (EEPSEA), revised Mar 2013.
  3. Andrea Kollmann & Friedrich Schneider, 2010. "Why does Environmental Policy in Representative Democracies Tend to be Inadequate? A Preliminary Public Choice Analysis," CESifo Working Paper Series 3223, CESifo Group Munich.
  4. Marius Ley & Tobias Stucki & Martin Wörter, 2013. "The Impact of Energy Prices on Green Innovation," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 13-340, KOF Swiss Economic Institute, ETH Zurich.
  5. di Cosmo, Valeria & Hyland, Marie, 2013. "Carbon Tax Scenarios and their Effects on the Irish Energy Sector," Papers, Economic and Social Research Institute (ESRI) RB2013/2/7, Economic and Social Research Institute (ESRI).

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