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The distributive effects of carbon taxation in Italy


  • Chiara Martini


The distributive incidence of environmental policies has not been widely investigated whereas more attention has been focused on the efficiency of environmental reforms. According to the Kyoto Protocol, domestic policies aimed at reducing carbon emissions can include carbon/energy taxes, emission trading, command-and-control regulations and other policies. Until now, only a few European countries have implemented energy or carbon taxes: Nordic countries have been the firstcomers, suggesting a tight link between institutional environment and the potential for policy adoption. In my analysis I assume that carbon taxation is fully shifted forward to consumers. The estimation of a complete demand system can clarify the impact of ecological tax reforms, help government to select appropriate fiscal policy and give producers the ability to forecast market demand. The demand systems underlying the simulation are represented by extensions of the Almost Ideal Demand System of Deaton and Muellbauer (1980b) and the Quadratic Almost Ideal Demand System (Banks et al., 1997). The different taxation scenarios I simulate is modelled by referring to the Financial Law for 1999 and the DPCM 15/1/1999; The output of the demand system estimation will allow to calculate the compensating and equivalent variations and to estimate the revenue raised by carbon taxation introduction.

Suggested Citation

  • Chiara Martini, 2009. "The distributive effects of carbon taxation in Italy," Departmental Working Papers of Economics - University 'Roma Tre' 0103, Department of Economics - University Roma Tre.
  • Handle: RePEc:rtr:wpaper:0103

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    Cited by:

    1. Robin Winkler, 2015. "Feast or Famine: The Welfare Impact of Food Price Controls in Nazi Germany," Oxford University Economic and Social History Series _136, University of Oxford, Department of Economics.
    2. Robin Winkler, 2015. "Feast or Famine: The Welfare Impact of Food Price Controls in Nazi Germany," Economics Series Working Papers Number 136, University of Oxford, Department of Economics.
    3. Roberta Distante & Elena Verdolini & Massimo Tavoni, 2016. "Distributional and Welfare Impacts of Renewable Subsidies in Italy," Working Papers 2016.36, Fondazione Eni Enrico Mattei.
    4. Robin Winkler, 2015. "Feast or Famine: The Welfare Impact of Food Price Controls in Nazi Germany," Oxford University Economic and Social History Series _136, Economics Group, Nuffield College, University of Oxford.
    5. Martin Beznoska & Johanna Cludius & Viktor Steiner, 2012. "The Incidence of the European Union Emissions Trading System and the Role of Revenue Recycling: Empirical Evidence from Combined Industry- and Household-Level Data," Discussion Papers of DIW Berlin 1227, DIW Berlin, German Institute for Economic Research.
    6. Giovanni Marin & Massimiliano Mazzanti, 2013. "The evolution of environmental and labor productivity dynamics," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 357-399, April.
    7. Silvia Tiezzi & Stefano F. Verde, 2017. "The signaling effect of gasoline taxes and its distributional implications," RSCAS Working Papers 2017/06, European University Institute.
    8. Paola Rocchi & Mònica Serrano, 2015. "The reform of the European Energy Tax Directive: does data disaggregation matter? The Italian case Abstract: In 2011, the European Commission (EC) proposed a new version of the Energy Taxation Directi," UB Economics Working Papers 2015/330, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    9. Cludius, Johanna & Beznoska, Martin & Steiner, Viktor, 2012. "Distributional effects of the European Emissions Trading System and the role of revenue recycling: Empirical evidence from combined industry- and household-level data," Discussion Papers 2012/6, Free University Berlin, School of Business & Economics.

    More about this item


    carbon tax; regressivity; demand system; welfare measures;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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