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Taxes, minimum-quality standards and/or product labeling to improve environmental quality and welfare: Experiments can provide answers

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  • Anne-Célia Disdier

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  • Stéphan Marette

    ()

Abstract

This study focuses on the welfare impact of taxes, minimum-quality standards, and/or product labeling. A theoretical framework shows that the combination of a label and a per-unit tax is socially optimal. Alternatively, if the label is unavailable, the theory cannot directly conclude which instrument should be socially preferred. Estimations of willingness-to-pay (WTP) are useful for completing the theoretical analysis and evaluating policies ex ante on case-by-case basis. Using hypothetical WTP for shrimp, we confirm that the combination of a label and a tax is socially optimal. In the absence of a label, simulations show that a minimum-quality standard leads to a higher welfare compared to a tax.
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Suggested Citation

  • Anne-Célia Disdier & Stéphan Marette, 2012. "Taxes, minimum-quality standards and/or product labeling to improve environmental quality and welfare: Experiments can provide answers," Journal of Regulatory Economics, Springer, vol. 41(3), pages 337-357, June.
  • Handle: RePEc:kap:regeco:v:41:y:2012:i:3:p:337-357
    DOI: 10.1007/s11149-011-9167-y
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    File URL: http://hdl.handle.net/10.1007/s11149-011-9167-y
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Olivier Bonroy & Christos Constantatos, 2015. "On the Economics of Labels: How Their Introduction Affects the Functioning of Markets and the Welfare of All Participants," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 239-259.
    2. repec:eee:agisys:v:163:y:2018:i:c:p:45-57 is not listed on IDEAS
    3. repec:gbl:wpaper:2013-01 is not listed on IDEAS
    4. Marette, Stéphan & Millet, Guy, 2014. "Economic benefits from promoting linseed in the diet of dairy cows for reducing methane emissions and improving milk quality," Food Policy, Elsevier, vol. 46(C), pages 140-149.
    5. Hugo Groote & Clare Narrod & Simon C. Kimenju & Charles Bett & Rosemarie P. B. Scott & Marites M. Tiongco & Zachary M. Gitonga, 2016. "Measuring rural consumers’ willingness to pay for quality labels using experimental auctions: the case of aflatoxin-free maize in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 47(1), pages 33-45, January.

    More about this item

    Keywords

    Regulatory instruments; Environment; Stated preference experiment; Willingness-to-pay; C91; H23; Q51;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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