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Distance to Hazard: an Environmental Policy with Income Heterogeneity

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  • Nakada, Minoru

Abstract

This study examines whether voting by individuals of different income levels affects the stringency of environmental policy if their residential proximity to a pollution source is considered. A location model with heterogeneous agents is extended to include a single environmentally hazardous site at the edge of a linear city and the degree of damage from pollution is assumed to depend on the distance from this emissions site. The analysis demonstrates through majority voting that the equilibrium emissions tax rate is higher when the income level of the median voter is lower, because residents with low incomes reside near the hazardous site and thus benefit more from pollution abatement than residents with higher incomes.

Suggested Citation

  • Nakada, Minoru, 2016. "Distance to Hazard: an Environmental Policy with Income Heterogeneity," MPRA Paper 120378, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120378
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    More about this item

    Keywords

    Environmental Taxation; Majority Voting; Residential Choices; Income Heterogeneity;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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