The role of information provision as a policy instrument to supplement environmental taxes: Empowering consumers to choose optimally
The present paper examines, within a dynamic framework, the use of information provision as a policy instrument to supplement environmental taxation. We assume that at least a fraction of consumers do not posses the required information to make the optimal choices, and that their behavior at each time period depends on the accumulated stock of information. We show that, as the accumulated stock of information provision increases, both the optimal level of information provided at each period of time and the optimal tax rate decline over time. Our results provide strong evidence in support of information campaigns as a policy instrument to supplement traditional environmental policies. Information provision can sift the demand towards environmentally friendly products over time and thus, reduce the required level of the tax rate.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eugene Choo & Robert Clark, 2006. "The Effectiveness of Anti-Smoking Campaigns over the Life-Cycle and the Role of Information," Working Papers tecipa-263, University of Toronto, Department of Economics.
- Heyes, Anthony G. & Maxwell, John W., 2004.
"Private vs. public regulation: political economy of the international environment,"
Journal of Environmental Economics and Management,
Elsevier, vol. 48(2), pages 978-996, September.
- Anthony Heyes and John Maxwell, 2003. "Private vs. Public Regulation: Political Economy of the International Environment," Royal Holloway, University of London: Discussion Papers in Economics 03/5, Department of Economics, Royal Holloway University of London, revised Dec 2003.
- Pim Heijnen & Lambert Schoonbeek, 2008. "Environmental groups in monopolistic markets," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 39(4), pages 379-396, April.
- Arndt, Johan & Simon, Julian L, 1983. "Advertising and Economies of Scale: Critical Comments on the Evidence," Journal of Industrial Economics, Wiley Blackwell, vol. 32(2), pages 229-42, December.
- Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 63-81, January.
- Yehuda Kotowitz & Frank Mathewson, 1979. "Advertising, Consumer Information, and Product Quality," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 566-588, Autumn.
- Avinash Dixit, 1979.
"A Model of Duopoly Suggesting a Theory of Entry Barriers,"
Bell Journal of Economics,
The RAND Corporation, vol. 10(1), pages 20-32, Spring.
- Dixit, Avinash K., 1978. "A Model of Duopoly Suggesting a Theory of Entry Barriers," The Warwick Economics Research Paper Series (TWERPS) 125, University of Warwick, Department of Economics.
- Kennedy, P.W. & Laplante, B. & Maxwell, J., 1993.
"Pollution Policy: The Role for Publicly Provided Information,"
9301, Laval - Recherche en Energie.
- Kennedy, P. & Laplante, B. & Maxwell, J., 1990. "Pollution Policy: The Role of Publicly Provided Information," Papers 9021, Laval - Recherche en Energie.
- Emmanuel Petrakis & Eftichios S. Sartzetakis & Anastasios Xepapadeas, 2004.
"Environmental Information Provision as a Public Policy Instrument,"
0414, University of Crete, Department of Economics.
- Petrakis Emmanuel & Sartzetakis Eftichios Sophocles & Xepapadeas Anastasios, 2005. "Environmental Information Provision as a Public Policy Instrument," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-33, November.
- Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
- Liston-Heyes, Catherine, 2001. "Setting the Stakes in Environmental Contests," Journal of Environmental Economics and Management, Elsevier, vol. 41(1), pages 1-12, January.
- Kihlstrom, Richard E & Riordan, Michael H, 1984. "Advertising as a Signal," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 427-50, June.
- Fred M. Feinberg, 2001. "On Continuous-Time Optimal Advertising Under S-Shaped Response," Management Science, INFORMS, vol. 47(11), pages 1476-1487, November.
- Kennedy Peter W. & Laplante Benoit & Maxwell John, 1994. "Pollution Policy: the Role for Publicly Provided Information," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 31-43, January.
- Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
- Jean-Pierre Dubé & Günter Hitsch & Puneet Manchanda, 2005. "An Empirical Model of Advertising Dynamics," Quantitative Marketing and Economics, Springer, vol. 3(2), pages 107-144, June.
- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
When requesting a correction, please mention this item's handle: RePEc:mcd:mcddps:2009_02. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Theodore Panagiotidis)
If references are entirely missing, you can add them using this form.