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Environmental Policy and the Energy Eficiency of Vertically Differentiated Consumer Products

Author

Listed:
  • Magdalena Brzeskot

    () (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))

  • Alexander Haupt

    () (School of Management (Plymouth Business School))

Abstract

We analyse optimal environmental policies in a market that is vertically differentiated in terms of the energy efficiency of products. Considering energy taxes, subsidies to firms for investment in more eco-friendly products, and product standards, we are particularly interested in how distributional goals in addition to environmental goals shape the choice of policy instruments. We Önd that an industry-friendly government levies an energy tax to supplement a lax product standard, but shies away from subsidies to firms. By contrast, a consumer-friendly government relies heavily on a strict product standard and additionally implements a moderate subsidy to firms, but avoids energy taxes.

Suggested Citation

  • Magdalena Brzeskot & Alexander Haupt, 2012. "Environmental Policy and the Energy Eficiency of Vertically Differentiated Consumer Products," Discussion Paper Series RECAP15 006, RECAP15, European University Viadrina, Frankfurt (Oder).
  • Handle: RePEc:euv:dpaper:006
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    References listed on IDEAS

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    More about this item

    Keywords

    Energy tax; energy efficiency standard; subsidy; vertically differentiated markets; product quality;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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