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Voting for environmental policy under income and preference heterogeneity

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  • Huhtala, Anni
  • Eerola, Essi

Abstract

We examine the design of policies for promoting the consumption of green products under preference and income heterogeneity using organic food products as an example. Two instruments are considered: a price subsidy for the organic food products and a tax on the conventional products. Under income disparity, consumers with high income always prefer a socially optimal subsidy to a socially optimal tax, while low-income consumers prefer a tax on conventional products. When environmental policy is determined by the median voter, the policies implemented tend to be stricter than socially optimal policies if income differences are large.

Suggested Citation

  • Huhtala, Anni & Eerola, Essi, 2005. "Voting for environmental policy under income and preference heterogeneity," Discussion Papers 11863, MTT Agrifood Research Finland.
  • Handle: RePEc:ags:mttfdp:11863
    DOI: 10.22004/ag.econ.11863
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    Cited by:

    1. Haavio, Markus & Kotakorpi, Kaisa, 2011. "The political economy of sin taxes," European Economic Review, Elsevier, vol. 55(4), pages 575-594, May.
    2. Jaeck Mélanie & Lifran Robert & Stahn Hubert, 2014. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Policy Instruments," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 1-14, January.
    3. Han, Fei & Zhou, Jiehong & Yan, Zhen & Yin, Shijiu, 2022. "Nudge to be Green? The Influence of Social Comparison on Consumers' Consumption Behaviors: A Case Study of Green Takeaway Packaging," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322228, Agricultural and Applied Economics Association.

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    Environmental Economics and Policy;

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