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The Vertical and Horizontal Distributive Effects of Energy Taxes: A Case Study of a French Policy

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  • Thomas Douenne

Abstract

This paper proposes a micro-simulation assessment of the distributional impacts of the French carbon tax. It shows that the policy is regressive, but could be made progressive by redistributing the revenue through flat-recycling. However, it would still generate large horizontal distributive effects and harm a significant share of low-income households. The determinants of the tax incidence are characterized precisely, and alternative targeted transfers are simulated on this basis. The paper shows that given the importance of unobserved heterogeneity in the determinants of energy consumption, horizontal distributive effects are much more difficult to tackle than vertical ones.

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  • Thomas Douenne, 2020. "The Vertical and Horizontal Distributive Effects of Energy Taxes: A Case Study of a French Policy," The Energy Journal, , vol. 41(3), pages 231-254, May.
    • Handle: RePEc:sae:enejou:v:41:y:2020:i:3:p:231-254
    DOI: 10.5547/01956574.41.3.tdou
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    References listed on IDEAS

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    1. Corbett Grainger & Charles Kolstad, 2010. "Who Pays a Price on Carbon?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(3), pages 359-376, July.
    2. Molly Espey, 1996. "Explaining the Variation in Elasticity Estimates of Gasoline Demand in the United States: A Meta-Analysis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 49-60.
    3. Rausch, Sebastian & Metcalf, Gilbert E. & Reilly, John M., 2011. "Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households," Energy Economics, Elsevier, vol. 33(S1), pages 20-33.
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    Cited by:

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    2. Schaper, Julian & Franks, Max & Koch, Nicolas & Plinke, Charlotte & Sureth, Michael, 2025. "On the emission and distributional effects of a CO2eq-tax on agricultural goods—The case of Germany," Food Policy, Elsevier, vol. 130(C).
    3. Mathilde Aubouin & Paolo Melindi-Ghidi & Jean-Philippe Nicolaï, 2025. "Complementarity in household expenditures on fixed and mobile Internet in France," Working Papers 2025-01, Grenoble Applied Economics Laboratory (GAEL).
    4. Lennard Schlattmann, 2024. "Spatial Redistribution of Carbon Taxes," ECONtribute Discussion Papers Series 345, University of Bonn and University of Cologne, Germany.
    5. Charles Labrousse & Yann Perdereau, 2024. "Geography versus income: the heterogeneous effects of carbon taxation," PSE Working Papers halshs-04464900, HAL.
    6. Bonnet, Odran & Fize, Étienne & Loisel, Tristan & Wilner, Lionel, 2025. "Compensating against fuel price inflation: Price subsidies or transfers?," Journal of Environmental Economics and Management, Elsevier, vol. 129(C).
    7. Angela Köppl & Margit Schratzenstaller, 2023. "Carbon taxation: A review of the empirical literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1353-1388, September.
    8. Franziska Klein & Jeroen van den Bergh & Joël Foramitti & Théo Konc, 2025. "Agentizing a General Equilibrium Model of Environmental Tax Reform," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(2), pages 459-502, February.

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