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Relative tax in a vertically differentiated market: the key role of consumers in environment

Listed author(s):
  • G. Ceccantoni
  • O. Tarola
  • C. Vergari

In this paper, under the assumption that green consumption has (at least partially) a social/psychological dimension, we analyse the effect of a carbon tax when it is imposed on consumers buying dirty products rather than on polluting firms. The amount of the tax paid is determined by the share of brown consumers in the market and the quality gap between variants. We show that this tax can abate emissions without inducing the undesirable relocation effect which can be observed in the case when a unilateral climate policy is imposed on polluting producers.

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File URL: http://amsacta.unibo.it/5571/1/WP2005.pdf
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Paper provided by Dipartimento Scienze Economiche, Universita' di Bologna in its series Working Papers with number wp2005.

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Date of creation: May 2017
Handle: RePEc:bol:bodewp:wp2005
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