Author: | Bansal, S. Gangopadhyay, S. |
Title: | Tax/subsidy policies in the presence of environmentally aware consumers |
Journal: | Journal of Environmental Economics and Management
2003 : MAR, VOL. 45:2S, p. 333-355 |
Index terms: | CUSTOMERS ENVIRONMENT POLLUTION SUBSIDIES TAXATION |
Language: | eng |
Abstract: | The authors study policy measures to improve environmental quality in the presence of environmentally aware consumers. The authors consider two sets of policy instruments-uniform policies for the firms and policies that discriminate between the firms based on their environmental quality. For the latter set, either the better performer is rewarded with a subsidy or, the worse performer is punished with a tax. The authors find that while a uniform subsidy policy improves average environmental quality, a uniform tax policy worsens it. Further while a discriminatory subsidy policy reduces total pollution and enhances aggregate welfare, a discriminatory tax policy may increase total pollution and may reduce aggregate welfare. |
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