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Environmental Information Provision as a Public Policy Instrument

Author

Listed:
  • 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.

Suggested Citation

  • Petrakis Emmanuel & Sartzetakis Eftichios Sophocles & Xepapadeas Anastasios, 2005. "Environmental Information Provision as a Public Policy Instrument," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-33, November.
  • Handle: RePEc:bpj:bejeap:v:contributions.4:y:2005:i:1:n:14
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    Citations

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    Cited by:

    1. Andrea Podhorsky, 2009. "Environmental Labeling," Working Papers 2009_3, York University, Department of Economics.
    2. Eftichios Sartzetakis & Anastasios Xepapadeas & Emmanuel Petrakis, "undated". "The role of information provision as a policy instrument to supplement environmental taxes: Empowering consumers to choose optimally," DEOS Working Papers 1012, Athens University of Economics and Business.
    3. 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.
    4. Sengupta, Aditi, 2015. "Competitive investment in clean technology and uninformed green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 125-141.
    5. Lucie Bottega & Jenny De Freitas, 2009. "Public, Private and Nonprofit Regulation for Environmental Quality," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 105-123, March.
    6. Sengupta, Aditi, 2012. "Investment in cleaner technology and signaling distortions in a market with green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 468-480.
    7. Gil-Moltó, Maria José & Varvarigos, Dimitrios, 2013. "Emission taxes and the adoption of cleaner technologies: The case of environmentally conscious consumers," Resource and Energy Economics, Elsevier, vol. 35(4), pages 486-504.
    8. Lehmann, Paul, 2008. "Using a Policy Mix for Pollution Control – A Review of Economic Literature," MPRA Paper 21354, University Library of Munich, Germany.
    9. 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.
    10. Eftichios Sartzetakis & Anastasios Xepapadeas & Emmanuel Petrakis, 2012. "The Role of Information Provision as a Policy Instrument to Supplement Environmental Taxes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 52(3), pages 347-368, July.
    11. 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.

    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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