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Morals and the Political Economy of Corrective Taxes

Author

Listed:
  • Felix Bierbrauer
  • Mattias Polborn
  • Marten Ritterrath
  • Georg Weizsäcker

Abstract

We study the political economy of carbon taxes when neoclassical consumers take all other agents' emissions as given and socially responsible consumers internalize damages in a group-rule-utilitarian way, taking neoclassical consumers' behavior as given. We characterize political equilibrium taxes with a focus on deviations from first-best Pigouvian taxation. Welfare falls further if arguments on moral obligations to reduce carbon footprints polarize the debate in society. Finally, we present survey evidence that supports our theory: social responsibility correlates with lower consumption of brown goods, higher preferred carbon taxes, and support for moral arguments.

Suggested Citation

  • Felix Bierbrauer & Mattias Polborn & Marten Ritterrath & Georg Weizsäcker, 2026. "Morals and the Political Economy of Corrective Taxes," CESifo Working Paper Series 12758, CESifo.
    • Handle: RePEc:ces:ceswps:_12758
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12758.pdf
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    Keywords

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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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